Southeast Asia's pioneer no-frills carrier AirAsia has set its sights on the lucrative Chinese market after opening talks with Chinese aviation authorities about two new routes.
The Malaysian-based company hopes the expected deal on the new destinations in China's south will fuel strong interest in its upcoming share sale exercise, which is now likely to be held in October.
AirAsia chief financial officer Raja Mohamad Azmi said that a series of talks had been held with Chinese aviation officials and the carrier was upbeat that flights could be mounted by year's end.
"Don't be surprised, we can be in China in the next few months," he said.
Raja Mohamad said the two new routes to China that have been identified were Chengdu and Kunming.
He said he was confident about the progress of the talks, the most recent of which were held in China last month, adding that authorities there were hospitable during negotiations and understood the airline's business strategy.
Raja Mohamad said the China-bound flights would take off from Bangkok.
In June, AirAsia launched daily flights from Bangkok to Macau -- the airline's third international destination out of Thailand after Singapore and Malaysia.
AirAsia chief executive Tony Fernandes said the carrier expects to handle about 7.5 million people by next year from 6 million this year.
The airline, which started with just two aircraft in December 2001, had plans to expand its fleet to 26 next year from the current 18. It now operates only Boeing 737-300s.
On competition from low-cost operators based in neighboring Singapore and rising oil prices, Fernandes said he was confident AirAsia would be able to stay ahead.
"We have the advantage of a domestic market and cost over them," he said, adding that "even if oil prices hit US$60 per barrel, we can still grow and make profits."
AirAsia's initial success has led to a growing number of budget air carriers being set up in the region. They include Singapore's Valuair and Tiger Airways.
Singapore's decision to build a dedicated low-cost terminal at its Changi airport underlines its determination to remain a leading aviation hub in Asia amid mounting competition, analysts said.
No-frills travel has taken off in Asia and the new terminal, the first in the region devoted to budget carriers, would give Changi a head start against regional rivals in the race to capture a major share of the growing traffic.
It is difficult to predict how big the no-frills market in Asia will be but the phenomenal success of budget carriers in Europe and the US has demonstrated clearly that there is pent-up demand, the analysts said.
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