Budget airlines built on cheap fares now face a painful reality: Fuel is getting expensive

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Budget airlines in Asia risk losing their price advantage as fuel prices rise and Middle East tensions disrupt key routes, forcing carriers to raise fares and cut expenses.

Low-cost carriers rely on high passenger volumes and low fares, leaving them with thinner margins and less room to absorb fuel price swings and route disruptions than full-service airlines.

Airline executives, speaking at the Aviation Festival Asia conference in Singapore, said they are now trying to cut costs, adjust fares and shift routes to avoid passing too much of the increase on to passengers.

″[We have to] adjust the fares, and at the same time, stimulate the demand,” Vissoth Nam, CEO at AirAsia Cambodia, told CNBC’s Monica Pitrelli during a panel on Thursday. “Otherwise, we don’t have travelers.”