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Mon, Jun 21, 2004 - Page 12 News List

Budget carrier looking beyond ASEAN skies

CHINESE MARKET Top executives of AirAsia don't have a timeline for China, but say the firm is willing to seize any opportunities that arise

AFP , KUALA LUMPUR

In its aggressive pursuit of overseas expansion, Malaysian no-frills carrier AirAsia has set its sights on China for a new low-cost service, officials said.

AirAsia chairman Pahamin Razab said the carrier's plan was to spread its wings across Asia, and that included regional giants China and India.

"Our mission is that we want to be a major low-cost carrier in the region. We want to spread our wings beyond the shores of Malaysia and the region -- and in the case of China, India and Southeast Asian countries -- all these are for the taking," he said.

He stressed the pioneer Asian budget carrier was eager to seize any opportunities that arose in China, although he did not set a time-frame.

"We may even start our own airline in China," he said.

"We do not want to go beyond ASEAN for the next couple of years, but if opportunities strike us, we might just go to China first, then India.

"China ... is more regulated. They do not have low-cost carriers, unlike India," he said.

Pahamin said AirAsia could operate either out of Thailand or Malaysia.

The carrier launched daily flights to Macau from Bangkok last week. Macau is AirAsia's third international destination out of Thailand, after Singapore and Malaysia. Direct flights from Kuala Lumpur to Macau will begin by the end of this month, the first direct flights to link the two cities.

Pahamin said the public response to the new destinations had been good so far.

An industry source close to AirAsia suggested that after flying to Macau, it would make good business sense to offer a service to the China.

"AirAsia could be flexible on how they start their airline in China. They can go alone or form a joint-venture or fly out of Bangkok or Kuala Lumpur," the source said.

Last month, AirAsia chief executive Tony Fernandes said the carrier was confident its low fares would boost tourism and bring a brand new travel experience to the people of Macau and the neighboring region.

Kamarudin Meranum, AirAsia's executive director, also said the carrier was "looking at China," but declined to reveal whether it was already in talks with Chinese authorities over beginning a service.

"It is a huge country with lots of potential. It has a big population. If we are allowed, we will begin our operation," he said.

Competition in the region for low-cost flights is set to heat up after Qantas said it would join Singapore's government in a budget airline to begin operations by the year's end.

ValuAir, a low-fare carrier set up by a former Singapore Airlines executive, is due to take flight next month.

AirAsia, meanwhile, plans to invest 228 million ringgit (US$60 million) as it builds up its fleet to 30 aircraft by the end of the year from the current 17. The two-year-old Malaysian company has become Southeast Asia's version of European budget carrier Ryanair. It has carried more than 4 million passengers since it was launched in December 2001.

Pahamin added that AirAsia's planned initial public offering (IPO) was on track for September.

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