Tuesday, November 11, 2008

Fuel, Fuel, FUEL

Fuel price may dip below RM1.92 in the future, says Shahrir

PUTRAJAYA: The Government has not set any floor price for fuel and the public may in the future enjoy the commodity at a rate lower than RM1.92 per litre if the Government feels the price is “reasonable and possible”.

Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad said at the moment, however, the possibility of Malaysian consumers enjoying fuel at rates lower than RM1.92 per litre has not been discussed.

According to him, the current concern was to ensure benefits of lower fuel price were passed on to consumers through regular price adjustments and it was “way too early to talk about enjoying fuel at prices below RM1.92”.

“However, if consumers are hoping for petrol to be at RM2 per litre by the end of the year, I don’t think that is too difficult to achieve,” he said.

Speaking to reporters Tuesday at the Malaysian Busines Ethics Excellence Award 2008, Shahrir said even if the global price for fuel went down further, the Government would still have to fork out money for the subsidy.

“The fact is, we need to put money to good use, like spending it on development and other purposes which can spur the economy.

“With the fuel price declining, it is time for the Government to spend less on subsidy and more on the country’s growth. If the money the Government has allocated for subsidy is used for development, more people will benefit from it in the long run,” he said.

Shahrir said the Government had spent a substantial amount on subsidy this year - RM5bil as rebates to eligible vehicle owners and another RM18bil for fuel and other forms of subsidy.

When the Government announced petrol would be sold at RM2.70 per litre in June, the amount of subsidy spent on fuel alone was RM1.97bil while July and August saw a decline in subsidy payment to RM1.95bil and RM1.42bil respectively.

Fuel is now priced at RM2.15 per litre for RON97. Both RON92 and diesel are now RM2.05 per litre.

Asked if there would be another round of fuel price reductions to be announced on Friday, Shahrir said the Cabinet had yet to meet and discuss the issue.

At the function, Shahrir presented awards to winners of the Malaysian Business Ethics Excellence Award 2008. Bukit Kiara Properties was named winner of the large companies category while the Sarawak Economic Development Corporation and Pusat Tuisyen Sri Wirajaya won the medium and small companies category respectively.

No Fuel Charge & 500,000 Free Seats: Air Asia

KUALA LUMPUR: All AirAsia and AirAsia X passengers will now no longer have to pay for the fuel surcharge for all local and international flights.

AirAsia Bhd group chief executive officer Datuk Seri Tony Fernandes said the move - effective Tuesday - would mean that passengers would now only have to pay for the fare, airport tax and administration fee when flying with them.

Fernandes explained that “getting rid of the fuel surcharge” would not affect the base rate of the air fare, but he could not guarantee that the airline would never re-impose the surcharge should world fuel prices skyrocket again.

“We're not increasing the base rate. It is what it is.”

“But if fuel prices shoot up ... I’ll be crazy to say I’ll never add the fuel surcharge again. But we will resist for as long as we can,” he told reporters Tuesday after making the announcement here.”

The check-in baggage handling fee, however, would be maintained as it was imposed not only because of rising fuel prices earlier this year.

“We did it (in April) for three reasons - fuel prices, to limit the number of luggage, and to be more environmentally-friendly.”

“The lighter the plane is, the less emissions it will have,” he said.

Fernandes also announced that beginning Wednesday, the airline would be offering some 500,000 free seats to all AirAsia destinations.

The booking period is until Sunday, and the travel period for the free seats is from June 22 to Oct 24 next year.

“There are two ways to deal with a slow economy. You’ve got to give more value, and you’ve got to stimulate people to travel.

“That’s what we’re doing now,” he said.

On the fuel surcharge, he said that it had previously cost passengers an average of RM47 per person.

Asked how the he planned to deal with the impact by removing the fuel surcharge, he replied:

“Higher load factor and newer initiatives to increase our revenue will help cover it. We’re keeping our 76% load factor, while adding 20% more seats.

“We’ll look at other ways of increasing our revenue. The easiest drug is fuel surcharge but it also destroys the business.”

Also present at the announcement was Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad, who applauded AirAsia’s move.

(Both news extracted from The Star Online)

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