Thai AirAsia starts China service

Thai AirAsia Co, a venture of Southeast Asia's biggest low-fare carrier, said it will fly to China for the first time next month, becoming the first airline to offer discount airfares to the world's most populous nation.

Thai AirAsia, formed by Malaysia's AirAsia Bhd and Thailand's Shin Corp, will fly daily to Xiamen from Bangkok, charging 1,899 baht (US$49) per seat each way on the three-hour journey, according to a statement received by e-mail.

Being first low-fare airline to tap China's growing demand for air travel "gives them an advantage," because "a lot more players will come later," said Chris Eng, an analyst at OSK Research Sdn. in Kuala Lumpur, who recommends investors to "sell into strength" on the stock.

"It'll take a while for the new route to mature, so they have to offer discounts," he said.

Thai AirAsia's low-fare Xiamen service would compete with Thai Airways International Pcl's thrice-weekly service and Xiamen Airlines Co's (廈門航空) twice-weekly offer.

AirAsia, based in Sepang outside Kuala Lumpur, is counting on China's growing demand for air travel to stay ahead of rival low-fare carriers including Jetstar Asia Ltd and Valuair Ltd. Jetstar and Valuair, both based in Singapore, are awaiting approvals to fly to China.

As many as 100 million Chinese could be flying abroad every year by 2020, a fivefold growth from the 20 million in 2003, according to estimates by the World Tourism Organization.

As the average Chinese household becomes more affluent and the government eases travel restrictions, the annual growth in air travel may increase 20 percent, faster than the global average, according to a forecast by Abacus International, Asia's biggest airline ticket sales agent.

Xiamen, the second largest city in Fujian Province, has a population of 2 million people. The province of 35 million people is the ancestral homeland for most ethnic-Chinese immigrants in Thailand.

"Xiamen has tremendous growth potential in both economic and tourism sectors," Thai AirAsia's chief executive Tassapon Bijleveld said in the statement.

"We can now offer a link to connect the cities of two great countries," he said.

Thai AirAsia will offer 8,888 seats to Xiamen at 1,899 baht each one way, a 27 percent discount, until Oct. 29, the company said. AirAsia is also in talks to fly from Kuala Lumpur to Chinese cities including Guangzhou, Tianjin and Beijing, chief executive officer Tony Fernandes said last September.

Thai AirAsia may fly 2.5 million passengers this year, more than double the 1 million people it carried last year, Bijleveld said on Feb. 1.

The carrier plans to expand overseas, including to Vietnam, to boost sales.

Thai AirAsia's fourth-quarter loss ended Dec. 31 narrowed to 30.1 million baht compared with a third-quarter loss of 73.2 million baht after it cut costs and sold more seats, it said on Feb. 21. Last year Thai AirAsia had a loss of 240 million baht and 1.45 billion baht in sales, the airline said.

Thai AirAsia expanded its fleet to six planes in the fourth quarter, from four aircraft, it said.