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AirAsia gains more domestic routes under new plan

17-Mar-2006

KUALA LUMPUR (AFX) - Low-cost carrier AirAsia Bhd will operate more frequent flights and routes to local destinations currently dominated by loss-making national carrier Malaysia Airlines, the government said. Under the rationalisation programme backed by the government, AirAsia would operate all the domestic non-trunk services.

"The government is of the view that the rationalisation process of the domestic flights sector was needed to ensure the long-term success of Malaysia Airlines and AirAsia," the prime minister's department said in a statement.

AirAsia will operate the domestic trunk services along with Malaysia Airlines.

Trunk routes are routes with high flight frequencies. There are currently 5-10 such routes in the country.

The government said Malaysia Airlines and AirAsia will be given the flexibility to determine the flight frequencies, capacity distribution, type of aircraft and fares subject to the supervision of the Transport Ministry.

AirAsia CFO Raja Mohamad Azmi told Agence France-Presse that under the rationalisation plan AirAsia would get more flights.

"Yes, we are happy because the government has finally come out with a rationalisation plan," he said.

AirAsia officials said under the plan, AirAsia would take over the unprofitable rural air services in the eastern Sabah and Sarawak states on Borneo island.

The government also ordered both AirAsia and Malaysia Airlines to work together to identify the trunk and non-trunk services and the frequency details.

Details of the negotiations will be presented to authorities by March 27.

"The government will ensure that the domestic flight services remain competitive and fulfill the needs of all customers," the statement said.

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