Malaysia's AirAsia has been reborn as South-East Asia's first low-fare carrier following its take-over late last year by new owners who are working to double its fleet and expand domestic services.

The carrier has struggled since its launch five years ago as Malaysia's second national operator after Malaysia Airlines. It was purchased by a group of local investors in December from conglomerate DRB-Hicom.

While the AirAsia name has been retained, the carrier has undergone a major overhaul with a new livery, one additional aircraft and fare cuts of up to 60%. "No-frills", one-class services are now being offered.

New parent company Tune Air says it is modelling the operation "after successful low-fare airlines such as US-based Southwest Airlines and Dublin-based Ryanair". It has hired Ryanair's former director of operations, Connor McCarthy, as an advisor to chief executive Tony Fernandes, a veteran of the local music industry.

A third leased Boeing 737-300 was recently added to the carrier's fleet and two more of the type are due to arrive on lease by April.

Two more domestic destinations have been added - Penang and Kota Bahru - while frequencies on other routes, including those to Kota Kinabalu, Kuching and Langkawi, have been increased.

Fernandes says the carrier, which was purchased for a nominal sum of 1 ringgit (26¢) plus the assumption of 50% of net liabilities, is aiming to raise 60 million ringgit to help it expand its operations. He says foreign and local investors are being offered a 25-30% stake.

AirAsia began operating in November 1996 and had plans for expansion, but was held back after the two-year Asia-Pacific economic downturn hit in mid-1997.

It operates out of Kuala Lumpur's old Subang airport, but the Malaysian government has said the facility will be shut in the coming months when a rail link from downtown Kuala Lumpur opens to connect the city with the gateway Kuala Lumpur International Airport at nearby Sepang.

AirAsia says it is seeking government approval to remain at Subang, which is much closer to the city's business centre.

Source: Flight International