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AirAsia has become the world's first low-cost airline to abolish fuel surcharges to boost travelling amid gloomy market conditions.

The airline announced the policy yesterday with immediate effect.

The surcharge removal will cover all domestic and international flights of AirAsia and AirAsia X.

As oil prices are plunging, last week Thai Airways International further slashed its fuel surcharges by 30 per cent on average, following a 25-per-cent cut in October.

Since November 8, Bangkok Airways has also cut fuel surcharges for domestic flights by 10 per cent, and by 30 per cent for international flights. Domestic surcharges will be US$20 (Bt700), from $25. International surcharges will be $25 to $95, from $40 to $110. Siem Riep Airways will also charge $20 for domestic flights from $25, while surcharges for international flights will be $25 from $40.

Group CEO Tony Fernandes said AirAsia's "no fuel surcharge" initiative reflects the current economic situation and the need to provide more affordable and transparent airfares for business and leisure travellers.

"With the current economic uncertainties, we understand how important low-cost travel is to people and the economy of Asean countries. By abolishing fuel surcharges, our low fares will stimulate new demand and boost tourism, thus bringing new revenue through visitor spending, stimulating employment, export earnings, and foreign investment".

The airline expects to increase the number of travellers within the region over the remaining months of this year as well as next year.

At present, aside from fuel surcharges, passengers are also required to pay airport tax and administration fees. Local travellers need to pay Bt50-Bt65 as airport tax for domestic flights and Bt700 for international routes. Moreover, travellers must pay an administration fee of Bt65 for local flights and Bt225-Bt440 for international flights.

Tassapon Bijleveld, chief executive officer of Thai AirAsia, said the company hopes to fly 4.7 million passengers in Thailand this year and would increase the numbers to 5.2 million in 2009.

"We also hope to encourage more people to travel to Thailand and around the region with our offering," said Tassapon.

AirAsia is operating 105 routes in the region. Within six years of operation, it has now hired more than 6,000 employees and has no plan to cut staff despite the economic slowdown.

In conjunction with the policy to boost travellers, AirAsia is launching a regional campaign giving 500,000 free seats.

Booking is open until November 16 for travelling between June 22 and October 24 2009.