Air Asia's end is near?

[DoMePlease]

Clouds loom over Malaysian budget carrier AirAsia's future

KUALA LUMPUR, Malaysia (AP): It has been blue skies for Malaysia's no-frills carrier AirAsia since it begun flying five years ago, but dark clouds are looming on the horizon.

AirAsia, a top pick of foreign investors since it was listed in November 2004, is losing its shine as high fuel costs, weaker-than-expected profits, huge capital commitments and increasing competition threaten its growth, analysts say.

Its share price plunged 12.2 percent last week to 1.30 ringgit (US$0.36; euro0.30) on Friday -- the lowest level in 1 1/2 years -- after the government said it would allow rival Malaysia Airlines to offer discounts on domestic routes.

Some brokerages have downgraded the stock to a "sell'' amid concerns the move may trigger a price war and hurt AirAsia's earnings.

Foreign investors hold 45 percent of AirAsia, the region's largest budget carrier in fleet size.

"In the volatile airline industry, it is difficult to maintain a market darling status for too long,'' said Peter Negline, aviation analyst with JPMorgan Securities in Hong Kong.

"We believe AirAsia is about to lose this as its poor earnings track record, high oil prices, lackluster franchises, large capital expenditure program and increasing domestic competition all hit the company,'' he said.

AirAsia has grown phenomenally since it started operations in January 2002.

Profitable from Day 1, it now has more than 1,600 employees and flights to more than 100 destinations in eight Southeast Asian nations, China and Macau.

Signaling Chief Executive Tony Fernandes' big ambitions, the airline signed an agreement last year to buy 60 new Airbus A320s over the next five years for nearly US$4 billion (euro3.3 billion), with the option to buy another 40 of the same aircraft.

It also has two 49 percent-owned subsidiaries in Indonesia and Thailand. But soaring fuel costs have hurt AirAsia's profits. In the 2005 financial year, the carrier posted a net profit of 111.6 million ringgit (US$31 million; euro26 million) in its Malaysian operations, 30 percent below its official target.

In March, AirAsia received a boost after winning rights to take over the bulk of domestic air services from Malaysia Airlines from Aug. 1 under government efforts to help the national carrier cut losses and become profitable again by 2007.

Under the revamp, Malaysia Airlines will serve just 22 out of 118 local routes and was told to charge full fares.

But the joy was short-lived when the government made a U-turn in policy this month, allowing Malaysia Airlines to cut fares and setting the stage for a price war with AirAsia, which has protested the move.

Transport Minister Chan Kong Choy last week said the government made the decision to create fair competition and a "level playing field'' between the two airlines.

Despite dropping many routes, Malaysia Airlines still services the most lucrative markets and can now effectively compete with AirAsia in its economy class segment, analysts say.

"AirAsia has reached a crossroad,'' said Muhamad Khair Mirza, aviation analyst at AmSecurities. "It is operating in an environment that is not conducive to its growth.''

The immediate hurdles for AirAsia are to meet large financial commitments, balance its growth and profit target, and overcome competition from Malaysia Airlines, he said.

"AirAsia is no longer a growth earnings story. It can become a market darling again only if the government, or a local white knight, comes in to revive its fortune,'' he said. "Otherwise, the stock will remain lackluster.''

JPMorgan's Negline said the national carrier had been viewed as a "weak cousin'' of AirAsia but it is becoming a formidable foe thanks to major restructuring that has involved laying off staff, reducing capacity and selling noncore assets.

On the other hand, AirAsia may be growing too fast and faces new pressure, he said. "The low-cost carrier model thrives on simplicity, but AirAsia's business is becoming increasingly complex,'' he said.

AirAsia risks getting "indigestion'' from excessive expansion, new fleet addition and cash-flow burdens as high oil prices hit earnings, Negline said.

AirAsia chief financial officer Raja Mohamad Azmi Raja Razali said investors are disappointed by the government's about-turn but the company is still profitable and its cash-flow remains healthy.

"Perception has turned negative because investors fear the domestic air rationalization will hurt our business but fundamentally, nothing has changed,'' he told The Associated Press.

"There are growing pains from time to time but we will manage it in our stride. We are not slowing down in our growth, it's business as usual.''

Rising oil prices pose a big challenge but the airline could further raise its fuel surcharge and hedge its fuel requirements to cope with it, he added.

[Left Wing]

They have made huge investments in their training center, 2 A320 sim and a full TRTO...how did a LCC get to afford that ! They should be out sourcing training just like other LCC's.....

Doom is close for sure.

[Garfs]

Hmmm Thought the apparent good opportunity to become an arline pilot in Malaysia was too god to be true

[flyr_flyer]

True enough. Maybe plan was TOO BIG and TOO Ambitious for AA and maybe too LATE to realise. Hope they would do well.

[DoMePlease]

Well what really bites me was that all along AirAsia said the sold cheap fares to benefit the people... but now that MAS can lower its fare to anything, Air Asia is saying its not fair. What happened to benefitting the people???

[ZFT]

They have made huge investments in their training center, 2 A320 sim and a full TRTO...how did a LCC get to afford that ! They should be out sourcing training just like other LCC's.....
Doom is close for sure.

Interesting view- Why do you think outsourcing would be cheaper? 2 of the largest LCCs (Ryanair and SWA) both operate their own training centres.

[Left Wing]

Compare the size of Ryan & SWA fleet with AA...it does not make sence.

[babyboeing400]

hmmmm.....point for discussion..if AK REALLY does go bankrupt,what will be the effect for MH?I'd very much like to think that it's only gonna benefit MH because of the removal of a strong competition in the ailing domestic routes..

[Chrome]

Well what really bites me was that all along AirAsia said the sold cheap fares to benefit the people... but now that MAS can lower its fare to anything, Air Asia is saying its not fair. What happened to benefitting the people???

It has become unfair because MAS has the resources (most of it not earned themselves) to take losses by offering discounts just to take traffic away from AirAsia and eventually kill AirAsia. I don't see anything wrong with the discounts to students or senior citizens but they should concentrate on being a full service airline. Why are they not concentrating on competing with other full service airlines, but attacking the smaller, weaker little brother?

Yes people will benefit but why create an unfair competition to another company who have made profits from 'day one' when they achieved that by just being hardworking, thrifty and revolutionary. AirAsia never took money from the Government. MAS takes losses using money obtained from the Government which was collected from the tax-payers just to kill another Malaysian company? Why can't both be helped to prosper with each concentrating in their own niche?

I am a Malaysian tax payer and it saddens me that MAS has lost billions of tax-payers money and after decades of operation, they still require government help and intervention to survive. While I am looking forward to MAS getting their act right in the near future for it is a national asset, AirAsia should be encouraged and helped, not killed.

Benefitting the people or not is not the issue here.

[ETOP]

No wonder.thats why AK and FAX is selling our f/o job to the Xpats!!USD 70G from B737,USD 40K from F-50 f/o position.:eek: Use these money to cover up the loss:= ???

[Garfs]

No wonder.thats why AK and FAX is selling our f/o job to the Xpats!!USD 70G from B737,USD 40K from F-50 f/o position.:eek: Use these money to cover up the loss:= ???

How does one go about "paying" in return for one of these jobs then?

[ZFT]

Compare the size of Ryan & SWA fleet with AA...it does not make sence.

With 100 aircraft on order – 500+ crews. That’s a lot of initial and recurrent training.

Even assuming only 15% attrition annually, that’s still going to fill up those simulators.

No hotac, per diems, loss of productivity etc.

Seems a very sound business case.

[reawold]

news out in the past 2 days newspapers:
1) AA to go to Hanoi,
2)Gomen to help AA secure landing rights toChina India.
sounds hardly like an airline that is dying.

but the airline that could, should but did not ,that GLC thingy, still feeling its way around, right sizing (nice biz buzzword but means nothing) still wasting gomen :sad: money.(latest was 650 million) now suddenly realises that the domestic market is important.

thought that they want to be an international player. always saying that the domestic market is too small, unprofitable blah blah blah.

nothing has change. the socalled smart managers are all still around doing damage. and thay are still spending money that they have not earned(MSS money), money that they are PROJECTING to earn(50 mil for 2007) in 2006.:ok:

[Chrome]

MH is too proud and will never admit that their past management were weak. They tried to close down AK and they failed, making business conditions worse for themselves. The ones now are 'smarter' with just trying to limit AK's growth while they try to catch up and at the same time roping in partners to help contain the dynamic setup that is AirAsia.

Idris Jala likes to use the word 'going forward'. He has uses this buzz word dozens of times in his speecehes and interviews. But you can't possibly go forward when you go back on issues that were discussed and agreed on weeks/months ago. Here's a tip Idris. You talk about something with someone, get a decision then move forward. If you back out of it, that's ungentlemanly. Wasting precious times discussing it the first time, wasting time when it is deliberated a second time and waste more time debating about it in between that.

Here's a worry for me. Instead of both airlines working together with each taking advantage of the other's strength FAST for the benefit of a lot of people, the neighbours make more and more inroads in this field, have more time to work on the challenges what with the high fuel prices, high competition etc. The time wasted in talking, lobbying and bickering should end.

[CAT IIIB]

So...the geez of all these;Which airline is better for a pilot?AA or MH?

[ikan_terbang]

Management is the key to survival here.
MAS is still reeling in from its MSS exercise and cant seem to get a grips with the work culture within.
AK is doing well but the creeping in of ex-MAS work culture is spoiling the airline.

[flyr_flyer]

A low cost is still a Low Cost . Both have been trying to kill each other . Good luck to AA . No matter how MH is still gov. owned

[Brianigham]

My little 2 cents:

We have to look at history to understand the present and to formulate plans for the future.

MAS, to be fair to the "bungling management" has never had a chance to actually go out there as a business entity and chart its own course.

They have always carried the flag. Which is not a bad thing!

If profits alone was the agenda, then it would have been run different.

Now the situation is a little different. The world of aviation has become more "down to earth" and many businessmen are in the business of low cost carriers.

Low cost, lending the benefit of choice to the customer at lower fares. The structure of these companies as well would have to reflect "low cost".

MAS on the other hand, has led the way in this industry not only in the country but also internationally. Structurally it was not wrong to assume that this was also an "employment creator". It was also the training ground for many people who are now with AA.

Don't hit on MAS:= without understanding the genesis of aviation in Malaysia, on the same note, I am not saying that this company has not rested too long on its laurels.

[reawold]

we are all entitled to our opinions based on our own understanding and analysis of the situation and the facts at hand. and the internet is where alternative views are aired. what we can say or cannot say will be decided by the moderators.

PROTON was also an employment agency but only after destroying the many car assemblers in existence then.

mas deserves to be hit if the many priviledges and advantages allocated to it were squandered by incompetent self serving management.

remember the statement made by idris at the international conference that a world jet fuel buying agency be set up? what was he thinking? monopoly?

[Chrome]

I don't see why MAS should plead 'social obligations' as its main reason for not doing well in the past. It is still a 'company' and any company should look into their costs so the revenue earned means something. A company that size should target for profits, unlike SMEs which targets breaking even. It was public knowledge that they have not managed their resources well. That's why it's not doing too good.

Come on, all GLCs have social obligations but their number one obligation is to turn a profit and not eat up more and more money that could have gone to better roads and schools.

[flyr_flyer]

"AK is doing well but the creeping in of ex-MAS work culture is spoiling the airline"

how about Air Force style ? Ah, the word culture, AA Culture ? Cut Cost ? Delays ? Work to the max ? Bend the rules ? Well, this is what I have just heard from my friend who works there. Can anybody confirm this ?

[babyboeing400]

working to the max is good for low-houred pilots imho...just build up ur hours pass the 1500 hours threshold then off u go to greener pastures!!:ok:

[boltak]

"Don't hit onMAS.." so typically like the mad doctor. only his opinion counts.no one else's. he would not listen to anyone , his advisers,his ministers even his god.and what we got were half past six decisions. now even the mad doctor had to turn to the alternative media to get his views across lately. his pride and arrogance has shackled MAS and many more companies and institutions. and the management protected from competition has grown complacent always sure that the government will bail them out when they fail. and fail they did, regularly.

and the politically appointed management has also learned to be arrogant and proud. not willing to listen to criticism whether constructive or not or suggestions. so can we expect quality decisions.

[Brianigham]

:ok: Okey then....hit on MAS.:p :p
I do not deny that it has been run very badly................psst.....and still is. Just wanted to give it a slight handicap lar.
We cant compare apples with oranges.
MAS has always had the extra baggage to carry. Look at todays STAR. Even after MAS is "so called" allowed to chart its own course, the GOV people are making a big fuss about the reduction in China destinations.
We really don't want to get into comparing MAS and AA culture do we. Or ExMAS culture as it is now termed. Then we might just have to go on and compare pilot standards:oh: ......then it can get a little embarassing.
Two different companies. Let them run la.
One will always say the other has an unfair advantage.:{

[Garfs]

So everything aside, what exactly IS the effect for low time Malaysian pilots hoping to get a job?

Thanks

[Fair.Pilot]

:.
We really don't want to get into comparing MAS and AA culture do we. Or ExMAS culture as it is now termed. Then we might just have to go on and compare pilot standards:oh: ......then it can get a little embarassing.
.:{
Different pilot standard? What are you trying to imply? Be more specific...

[ASIAN FROG]

With the firm orders made in Farnborough, I do not think Air Asia is in a so bad situation....
About low hours pilots, the question is not only to accumulate flight hours but to be trained up to certain standards. You can accumulate 1000 hours of cross country and to be unable to fly instruments as per required accuracy.
Hours is one issue, what you are doing during those training hours is another one and probably, the most important one.
...
good luck

[Garfs]

Asian Frog

Thanks for your reply

Garfs :ok:

[kwaiyai]

I bumped into a former MFA Grad who with AA now at LCCT. Didnt sound too bad too me there except the deal for newbe joins not sponsored.
Regards,

[ASIAN FROG]

We cannot state anything based on only an individual experience.
As you know, training is not an easy chemistry which depends on many parameters: the individual, the syllabus, the instructors. If the Ab initio training is not correctly optimised, the induction in Airlines has to be heavier and the overall cost is increased for the same result at the end. So the chain of training has to be considered from zero to an operational first officer, the consistency and optimisation has to be checked along the whole chain.
Unfortunately defects are often detected very lately through incidents. It is all the experience of Civil Aviation which day after day is used to improve selection and training. In my background, I have participate (As defender) in discipline court in a major european airline. Mostly of time I have to acknowledge that the files of involved individuals were already presenting deficiencies in the very ab initio training, the incident was most often a confirmation.
Then there is the adaptation to new technologies, and particularly with arrival of Glass cockpit Airliners. New philosophy and new issues to face.
A trial is just ending in France on the Saint Odile accident: was the map of the EFIS accurate or shifted by 2 Nautical miles? We cannot rely idiotement on the information given by a computer, from time to time a "bug" is introduced in the calculation chain. Maybe by our mistake, maybe by a faulty DME and a stormy environment as it seems to be the case for the Mont Saint Odile. In any case, a proper knowledge (and practice) of those modern technologies must be acquired. The less expansive is to do it during the Ab Initio training. Modern tools have to be used like FNPT (Flight Navigation and procedure Trainer). Some schools have done the investments, some not yet.... Maybe cadets coming from the last category are still comfortable on a classic airliner, what about the next generation?
In any case, experienced crew on the last generation of aircraft underline that, contrary to what initially the manufacturers were saying, you must have a sound knowledge of your aircraft and its systems if you do not want to be trapped one day. As an example the A 320 type Rating excessively minimised 10 years ago has inflated slowly ...

[Garfs]

Do you think AA will be recruiting slowly for pilots over the next 5 years or as someone said to me just up until 2008?

Thanks

[flyr_flyer]

I think they have to be recruiting because many are leaving mainly due to lifestlye, pay, management, etc ...

[ExMAS]

Is it possible that "the end is near" now that AK has firmed up its option of 40 320s and taken a further option on another 30 aircraft?

[Dani]

Is it possible that "the end is near" now that AK has firmed up its option of 40 320s and taken a further option on another 30 aircraft?

Well, if you need some money liquidity urgently, you just order nice new aircraft, sell them, lease them back and you got your dollars!

btw that's how some European LCC survive these days...

Dani

[ASIAN FROG]

Air Asia does not depend only on Malaysia. So the impact of what happens in Malaysia has to be relativised.

[ExMAS]

I guess Tony isn't that smart after all. If he had the kind of business acumen espoused by dani he would have ordered 100 380s, sold them, leased them back and survive like "some European Lccs."

Sheesh!!!!!!!!

[Slasher]

One thing Ive realised is Tony Fernandes is damn smart when it comes to "apparant" crises. Who remembers his last when the Big Boys sought to undermine his Thai venture and boasted he'd be stuffed?
His style follows a golden rule of business - let the competition think your down, let them plan accordingly, then floor them with one sudden swift stroke.

[flyr_flyer]

looks like a copycat thing . those are eu lcc's , lcc here is different. aa is copying from all over and tries to apply it here but people here gets different kind of treatment and benefits. ordered another 40 airbuses will be good but good luck to them b'cos there will be no one to fly them and probably later on then will lease the airplanes out or try another con job like f/o program without proper documents, get some employment agency to supply pilots, cadets ??? hmmm, heard those cadets coming out have no idea about flying a jet and was told not to send the cadets to toulouse cos they wont make it, instructors ? not enough.DEC that has no idea will be unofficially trained by the sf/o's instead of instructors. money ain't enough other places are paying alot more, MEL's ? wel alot of the guys are very familiar with it in aa because it's an everyday affair, last minute is common, cutting cost is no:1 instead of safety, grounding of crew and verbal threats are common, everything shortcut. with all this going on and without looking at the people and practice more professionalism, aa's end is really really near with many people leaving and wanting to leave. be proud but dont forget your humble pie where you use to take a bite once in a while and try to keep the head from growing too BIG ! well all this info could be riht and could be wrong it's just info, news, rumours heard and gathered from all over ... believe it or not anyways it's just rumour probably .. any1 from the inside mind to share :)

[imdragon]

Both are commercial entities. Responsibility is to the shareholders. Delivering the best value to them is the stated aim of any such entity.Now here's the difference which is glaringly in fron of us glaringly in front of us!

There has to be a motivator for the managers of the business to perform the best. There is two.

FIRST- The managers get good performance bonuses if they deliver the profit. Be it cash or share options and of course the sack if the delivery is a failure. The backlash should be severe enough, that he would not be able to find another job on the drivers seat for the rest of his life from any right thinking organization. This should be motiation enough for a manager to perform if not for the love of money, at least the scare of being reduced to an insect.

SECOND - The managers are the owners of the entity. I would have sleeepless nights if I had put my fortune where my mouth is. If the company turns turtle it is my money, my family's life and my life. I could never be a clock watcher, will be first on the scene in crisis, motivate my staff, learn every nuts and bolts of my operation and then I could speak with certainty of the path I am leading my organization.



Then why do organization still fail despite being managed by the largest shareholder. Well, when you are in the the driver's seat because you are the largest shareholder by owning a minority share you earn better by scheming the company's business into companies you fully control. Even though your minority shareholding company losses. you can legally carve off a bigger amount through your fully owned companies. Corporate governance (good luck to you if you invest by believing in it), enforcement, ownership of failure - who cares, I can go on because I am one of the little napoleans, .

Take a pick guys and gals. which kind is yours!

[GTR-34]

:}Well said Imdragon:D.... I think the "kite" was legally carved out into bits and pieces in the mid-end 90s ...Don't know if they are still being carved out now:)

[imdragon]

There has been numerous inevitable comparisons of MAS and AA in this forum, more so since both are competitors, but I felt that comparing micro events in isolation to make sense of the beat in both the organizations often takes off at a tangent and often misses the central point, ‘presence or absence of adequate management leadership’.

We are what we are today for better or for worse is because of the leadership we were under. My opinion explored a plausible explanation so that we can move on. GTR-34, I would like to think that the government has put MAS on the right track. No carves. Remember, a 30+ year odd old culture is hard to unwind. On a fast track it may require a revolution which would certainly cause an upheaval in the organization. The MSS/VSS is one product of it. Mr, Idris Jala has his vision and has fought hard get things his way and has shown his determination in recent battles. There a lot of good people in his organization. Some of them share the constructive opinions in this forum.

AA started off with a clean slate. With some good help Tony sculptured the culture required for his model to survive and grow. He too is a determined battleship. There is no doubt he draws mostly admirers and some detractors.

As an observer on the sidelines it is interesting to see the two brands fight their cold war. It is an indication of the vibrancy of the brands and their leadership. Imagine if they were to cooperate and take on the rest of the world. The competition is out there-global. My best wishes to both of them.

[Virtual Reality]

As long as there are still some hidden hands behind the scene, it is quite difficult to reform the whole airline industry in Malaysia, let alone to bring MAS to the same level as CX and SQ (just to quote a few). :ugh:

If only we could separate between political cum financial interest and business interest, things could be different. Just a thought.

[ASIAN FROG]

UL 501
You confirm that AA is diversying its business and does not depend solely on Malaysia.
Malaysian should look around themselves. The issue is not between MAS and AA. AA has overpassed this stage.

[flyr_flyer]

AA wants everything but the problem is that they can't even handle themselves here in m'sia. Even Bonus is delayed from last year end till next month according to sources and with more and more delays everyday. IMHO, i think AA should fix their internal problems before expanding out too fast. But the good thing is AA is employing locals and foreigners at a good rate and MH should give more opportunity to locals. Just my 2 cents.

[ASIAN FROG]

Air Asia is no more only a Malaysian company. It is international with Thai, Indonesian and other share holders. What is happening in Malaysia is only one part of the story. Today Air Asia has announced the opening of new destinations from SUVARNABHUMI airport (New Bangkok airport). All experts are predicting than Suvarnabhumi is going to be the most important hub in SE Asia in front of KL and Singapore. Air Asia is in the race....
Do you know that Thai cadets are trained in Thailand to fly (Thai) Air Asia? there is not only the issue of Malaysian cadets. All the order of A 320 are not dedicated to Malaysia only but are going to be shared between the different components of Air Asia....
It is pathetic to see some people restricting the comparison to MAS/ AA ... They should look around....

[Chrome]

Bonus has been paid to AK staff last week. Or so I've heard.
People are just too uncomfortable with AK's rate of growth. I can't blame them as no one has seen this kind of success before especially since so many look down on AK since it started operations. No one thought they would survive because 'the domestic market is too small'. But they came in and created a totally separate market for themselves and making money from it. Admit it, AirAsia is responsible for making millions of people in Malaysia realise that MAS could and should do better. After nearly 50 years of existence and nothing much to show for apart from having the best cabin crew, maybe now we get to see MAS turn into an airline to be really proud of. Forget about egos. The smaller brother can sometimes show the bigger brother a thing or two about doing business.
AirAsia has showed what they could do the past 4 years. It is actually a start for them, not the end. Critics which forecasted them to fail in 2002 are still preaching the same now :D

[ASIAN FROG]

New airline for AirAsia?
BOONSONG KOSITCHOTETHANA


"AirAsia group chief executive Tony Fernandes (left) and Thai AirAsia chief executive Tassapon Bijleveld pose with an A320 full flight simulator at the AirAsia Academy.

Sepang, Malaysia _ The budget airline AirAsia may set up another low-cost carrier (LCC) in Southeast Asia as it prepares to acquire 30 additional Airbus A320 jets to bring its fleet to 130 by 2012. AirAsia group chief executive Tony Fernandes hinted about the plans during a briefing on the launch earlier this month of Fly Asian Xpress (Fax) and the signing of a firm order contract in July for 40 A320 aircraft worth US$2.7 billion.

''We may set up another [airline] in another country in Southeast Asia. But I cannot say too much now,'' Mr Fernandes told the Bangkok Post.

However, he said it was ''very likely'' that AirAsia would exercise the options to purchase 30 additional A320s, the basic agreement reached in July with Airbus, for delivery between 2010 and 2012.

Fax, which began to fly Malaysia's domestic routes in Sabah and Sarawak on Aug 1, is the fourth member of the group, which already includes Thai AirAsia and Indonesia AirAsia, in addition to its flagship carrier in Malaysia, AirAsia Bhd.

The new airline was created to take over the domestic routes in Sabah and Sarawak from Malaysia Airlines which is cutting back loss-making local services.

Barely five years old, the airline group surpassed the 20-million passenger mark in June this year. It offers 2,450 weekly flights in the region spanning 11 countries covering Malaysia, Thailand, Indonesia, Macau, China, the Philippines, Vietnam, Cambodia, Singapore, Brunei and, recently, Burma, with 44 aircraft.

Mr Fernandes was optimistic about the growth potential of budget traffic demand in Southeast Asia that would support AirAsia's expansion.

For this year alone, he sees the LCC traffic surge by 15-20%, spurred by aggressive marketing by budget carriers and low fares being offered.

Also as part of its expansion, AirAsia on Monday officiated the launch of two Airbus 320 full-flight simulators, valued at $10 million each, as it geared up to prepare pilots, cabin crew and engineers for its fast-growing fleet of A320 jetliners.

Plans are afoot to procure another three A320 simulators at its AirAsia Academy, its new flight-training centre near the LCC Terminal, part of the Kuala Lumpur International Airport.

The AirAsia chief noted that the group planned to retire its entire fleet of 737-300s, now numbered at 35, and replace them with brand-new A320s, configured to 180 seats, to make it an all-A320 fleet.

Commenting on last week's foiled London terror plot to blow up commercial airplanes, Mr Fernandes said the issue was unlikely to affect LCC traffic in the region.

''I don't think [there would be any effect]. We have been through so many terrors [and] the tsunami. We had Bali bombs right in our LCC territory. But we are doing better than ever in Bali.

''We have 500 million people in Asean and they are less worried about what's happening in the US or Europe. People still have to travel, they want to have holidays,'' he said.

However, Mr Fernandes stated that AirAsia still had to go on with aggressive marketing, offering low fares and a greater network to ward off outside factors from affecting future growth.

Regarding Airports of Thailand Plc's plan to set up a terminal dedicated for LCC at Suvarnabhumi Airport, Mr Fernandes did not see the Thai LCC terminal as competing with but rather complementing Kuala Lumpur's LCC terminal that opened earlier this year.

''They are different markets. The LCC terminal here won't really serve the larger part of the area that Thailand will. Thailand is further north, closer to China,'' he said.

''The LCC model is made for the three-hour radius. So from three hours, you can't cover many destinations from KL. The Thai LCC probably won't cover a lot of Indonesia. So each LCC terminal will have its strengths, creating more flights."

MAS an International local company, Air Asia a local International Company....