Flag carrier Malaysia Airlines said Tuesday it will scrap fuel surcharges for domestic flights as part of efforts to boost air travel amid an economic slowdown. The airline said surcharges would be abolished Wednesday amid competitive pressure and following a decline in fuel prices. The move comes nearly two months after its rival, budget carrier AirAsia, removed fuel surcharges on all flights.

Malaysia Airlines had earlier reduced fuel surcharges for selected international travel including from Malaysia to Korea, Japan, Paris, Hong Kong and Singapore. Despite recent falls in the oil price, Managing Director Idris Jala said the carrier's fuel costs were still be higher than in 2004 when the fuel surcharge was first introduced. He said fuel remained the company's biggest cost, and that the surcharge only covers about 30 percent of its fuel bill.

Jet fuel, which is sold at a premium to crude oil, currently costs around $60 a barrel. Crude prices have tumbled to around $37 a barrel from a peak of nearly $150 last July as slower global economic growth crimps demand for oil.