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AirAsia has grown into Asia's biggest discount airline in the 10 years since being taken over by Mr Fernandes. AP Photo
AirAsia has grown into Asia's biggest discount airline in the 10 years since being taken over by Mr Fernandes. AP Photo

AirAsia mulls budget service in Gulf region

AirAsia considers setting up a low-cost carrier to serve the Gulf region, almost two years after its long-haul division AirAsia X axed its Kuala Lumpur to Abu Dhabi service.

AirAsia, based in Malaysia, is considering setting up a low-cost carrier to serve the Gulf region, almost two years after its long-haul division AirAsia X axed its Kuala Lumpur to Abu Dhabi service.

Tony Fernandes, the chief executive of AirAsia, said in Doha yesterday an opportunity had opened up for a budget airline in the region. The Gulf is dominated by premium, full-service carriers although budget carriers such as flydubai, Air Arabia and RAK Airways have emerged in recent years.

Mr Fernandes said: "As a low-cost carrier, we are (into) creating new markets. The key is to create really low fares, which I think the Gulf hasn't seen.

"If you want to compete, you have to create a product that's very different and extremely low priced, so that a guy can go to Dubai for a cup of coffee and come back with his airfare being about the same as his taxi fare."

He said AirAsia had already opened discussions with unnamed potential partners to set up such a budget airline, adding, "AirAsia is investigating (the prospects) quite seriously".

Mr Fernandes also raised the prospect of the group establishing a Middle East hub, which could help its long-haul division reopen services to Europe.

AirAsia X, which left Abu Dhabi in 2010 after three months, has since scrapped routes to London and Paris, blaming the EU's new carbon emissions tax, which is based on the distance from a flight's last departure airport.

A stopover hub in the Middle East before flying to European destinations could help AirAsia X manage the additional cost.

"We want to have a hub in the Middle East in our 10-year strategy, since Asia is more or less covered. Two or three parties have made known their interest. It's interesting, but the talks are very preliminary," Mr Fernandes said.

The carrier has grown into Asia's biggest discount airline in the 10 years since being taken over by Mr Fernandes.

dblack@thenational.ae

* with agencies

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