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November 27, 2008

Malaysia’s budget carrier keeps privatisation option open
AirAsia said yesterday plans to take the carrier private were still “definitely an option” as it opened bookings for a new London-Kuala Lumpur service with cut-price fares, reported Reuters.

AirAsia X, the low-cost, long-haul affiliate of AirAsia, is due to launch the five times weekly direct service between London Stansted airport and Kuala Lumpur International Airport in March 2009 in a bid to win new customers and boost its profile.

The company is offering £99 flights (549.90 ringgit) between March 11 and Oct 24, 2009, AirAsia said, without specifying how many seats on each flight would be available at that price.

“People want value and want to travel and want to get away from the bad news. I see the current economic situation as an opportunity to capitalise and build market share and presence,” said chief executive Tony Fernandes.

Asked about the progress he was making in taking the carrier private and de-listing it from Bursa Malaysia, Fernandes said “it (taking the company private) is definitely an option. We’ve asked for more time and are trying to be as transparent as we can, so let’s see.”

Passengers of AirAsia will have to contend with a new tax on long-haul flights from the United Kingdom after British Chancellor Alistair Darling on Monday said he would increase the tax by 50 percent in two years’ time.

Air passenger duty (APD) is currently levied at £10 on a passenger flying economy class to European destinations and £40 for those going further, which Darling said will rise to £60 by the 2010/2011 tax year.

“I think aviation taxes are better if they are charged per flight because then you reward efficiency, but as it is you are not rewarding airlines such as ours that put more seats in per square foot,” said Fernandes.

“Like everyone else we will just have to deal with it (the APD hike) but I think it’s dangerous to overtax an industry.”

Southeast Asia’s largest low-cost airline, which also has operations in Thailand and Indonesia, expects to achieve a strong fourth-quarter performance as passengers continue to trade down to budget carriers, said Fernandes, who added that the airline, which does not currently hedge for fuel, would be “comfortable taking jet fuel hedges at around $40 (145.20 ringgit) to $45”.

The price of January Brent crude oil currently is hovering around the $52 a barrel mark. AirAsia closed at 1.13 ringgit Wednesday.

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