“As for Delhi and Mumbai, the continued visa restrictions for travel between India and Malaysia, and the increase in airport and handling charges have resulted in a structure not conducive to the low-cost model,” AirAsia X chief executive Azran Osman-Rani said in a statement.

AirAsia X is also pulling out from Paris and London, citing high costs.

With Delhi and Mumbai airports being modernized at over $6 billion, the costs will be partly recovered from the airlines and passengers as per a report in Mint by Tarun Shukla.

Airports regulator Airports Economic Regulatory Authority (Aera) has proposed a hike of 340% in airport charges, including passenger levies, for Delhi airport from 1 April. Aera’s final order will be released after consultations with stakeholders, including passenger associations, over the next few weeks.

“The airport and handling costs in New Delhi and Mumbai are already more expensive than even airports in Australia, and the authorities have just approved a massive 280% increase in airport fees effective April 2012,” the discount carrier said in an email, adding that its four weekly services to Mumbai will be terminated from 31 January while daily flights to Delhi will be suspended from 22 March.

At Delhi, passengers already pay Rs. 221 as a airport development fee for domestic travel and Rs. 1,434 for international travel. Aera will announce the revised levy soon. At Mumbai, too, an airport development fee will be levied soon on domestic and international travel, which will be raised once the airport modernization is completed in 2014.