Fernandes keen to invest in regional premium carrier

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AirAsia founder Tony Fernandes sees a strong market for a medium-haul premium regional carrier, but says that his low-cost carrier will not dabble in it.

"It's not something we will pursue. My focus is on keeping everything low-cost," he says, although he did not rule out personally investing in such a business model.

"I do believe that the industry is heading towards a premium model and a low-cost model. If those opportunities exist where there's a true premium model − me as an investor, I'll be interested," he says.

He adds that it is "very hard" for legacy carriers such as Malaysia Airlines (MAS) and Singapore Airlines to compete with low-cost carriers such as AirAsia on the low-cost market, but that there is an untapped market for business-class travels.

"If you fit those A320s with business-class seats, it's going to work very well," he says.

Last year, Fernandes had said that he planned to start a new all-premium regional carrier based in Kuala Lumpur with MAS to cater to business travellers. Talks, however, fell through with MAS when the two carriers could not reach mutually agreeable terms.

Australia's Qantas Airways has also announced plans to set up a similar carrier based in either Kuala Lumpur or Singapore.

These announcements were made before the recent divorce between MAS and AirAsia whereby a share-swap deal was scrapped.