Malaysian long-haul low-cost airline AirAsia X has the Middle East in its sights as it looks to set up a "virtual" hub in the region as part of its expansion plans. It is believed to be eyeing either Abu Dhabi or Bahrain for the hub. It does not plan to base aircraft at either location, but fly to points in Africa, Europe and the Middle East using the aircraft that come from Kuala Lumpur.

It is not clear if it will receive the fifth freedom rights needed to fly such services, and local Middle Eastern carriers could oppose the plan as it would eat into their market share.

It comes as the Malaysian government dithers on allowing AirAsia X to start flights to Sydney in Australia and Seoul in South Korea. "We do not want to lose the momentum we have created in the 20 months since we began operations, and that is why we are looking at this option," says AirAsia X chief executive Azran Osman-Rani.

The carrier receives three Airbus A330s before year-end, part of 23 A330s and 10 Airbus A350son order. It has no plans to defer any of these, but that means it needs to find new routes or to increase existing services.

From Kuala Lumpur, AirAsia X flies to the Gold Coast, Melbourne and Perth in Australia, Tianjin and Hangzhou in China, Taiwan's capital Taipei and London. It could increase the frequency on most of those flights, says Azran. It plans to add routes to China and begin flights to India in 2010, he adds.

The airline also hopes to add another destination in China and its first in the Middle East before year-end. Azran adds AirAsia X is looking to set up another virtual hub in Australia or New Zealand, although that is still at the early stages of planning.

Azran plays down suggestions of a merger with short-haul low-cost carrier AirAsia. Tony Fernandes, Air Asia group chief executive, mooted the possibility in June. AirAsia owns 16% of AirAsia X, while other shareholders include the Aero Ventures group co-founded by Fernandes. Azran says: "As far as AirAsia X is concerned, nobody here is looking at a merger. We've received no proposal from AirAsia."

Read our recent cover interview with AirAsia Group chief executive Tony Fernandes

Source: Airline Business