AirAsia X, a new long-haul, low-cost carrier, will take off in July with flights to Britain for as little as RM9.99, aviation tycoon Tony Fernandes said today.

AirAsia X will service other destinations in Europe as well as China and India, said Fernandes, the founder of leading Southeast Asian budget carrier AirAsia.

"AirAsia X will offer an innovative product ... assuring passengers who will enjoy a level of comfort and convenience suited for long-haul travel," he said.

The new airline will be operated by Malaysian carrier Fly Asian Express (FAX), also founded by Fernandes and which currently operates rural air services on Borneo island.

AirAsia X will operate from the low-cost terminal at the Kuala Lumpur International Airport (KLIA) and seats on the flights to Britain will be available on the Internet from February.

Fernandes said AirAsia X expected to carry half a million passengers in its first year of operation and was looking at acquiring 20 new aircraft.

"It will be of one type only, either the 777-300 or the Airbus 330-300. We will make an announcement by the end of January," he said, declining to say whether they would be leased or paid for by shareholders or through loans.

Team up with Virgin, EasyJet?

FAX said that AirAsia X will also tie up with other low-cost carriers "in order to increase connectivity and route network".

Fernandes would not name the partners but The Star newspaper reported this week that it is planning to team up with Richard Branson's Virgin Group and EasyJet to launch "the world's first low-cost global network".

"I have personal relations with both of them; we are always talking but there is nothing to announce," Fernandes said when asked whether there was any role for Virgin and EasyJet in the new venture.

Fernandes said the Malaysian government has given approval for AirAsia X to fly to Australia but that a formal announcement will be made later.

The CEO of FAX, Raja Mohamad Azmi, said AirAsia X would fly to Tianjin and Hangzhou in China but he would not reveal destinations in Britain, India or Europe.

"Average fares will be 50 percent of the market price on all the routes," he said. At the launch ceremony staff paraded wearing T-shirts spelling out "9.99" to promote the ultra-cheap fares to Britain.

Newspaper reports have said that the new venture is likely to operate out of either Manchester in northern England or Luton outside London.

MAS fears

Transport Minister Chan Kong Choy played down fears of a damaging impact on struggling national carrier Malaysia Airlines, saying "in principle we want two champions.

"We want both airlines to enhance tourism. Initially we have approved routes to AirAsia X which Malaysia Airlines does not operate," he said at the launch.

Hong Kong's flag carrier Cathay Pacific, which has seen Oasis Hong Kong start a budget service to London from its home patch, said it will ensure its pricing remains competitive.

"The aviation industry has always been a competitive market. We will continue to make sure our products are price competitive," a Cathay spokeswoman said.

AirAsia deputy chief executive Kamarudin Meranum said that FAX, which holds the AirAsia X brand name, has offered AirAsia a 20 percent holding with a 10 percent option and that the board of directors will announce a decision later.

AirAsia was launched as a budget carrier in December 2001 with just two aircraft but now offers more than 100 domestic and international flights to Malaysia, Thailand, Indonesia, Singapore, Cambodia, Vietnam and the Philippines.