Budget carrier AirAsia said today a surprise move from Malaysia Airlines (MAS) to offer discounts on domestic flights was unfair and a "total deviation" from an agreed plan to share those services.

"We feel it is unfair. We feel we should be given an opportunity from the government to state our (position)," AirAsia group deputy chief executive, Kamarudin Meranum told AFP .

"We are surprised by the announcement ... What surprised us more is that it did not come from the government but it came from Malaysia Airlines," he added.

Loss-making MAS announced yesterday the government had given it the nod to offer discounted fares on its domestic routes to better compete with AirAsia, a move expected to spark a price war and benefit consumers.

Under a new aviation policy to rationalise domestic routes which takes effect on Aug 1, AirAsia is to take over 99 of MAS' domestic routes, many of which are currently losing money.

The policy originally set a minimum fare or floor price for the national carrier's domestic routes but the announcement from MAS was an apparent government reversal of that decision.

Gov't breaks agreement

AirAsia chief executive Tony Fernandes had last week called for the floor price to be maintained, saying MAS was already receving a one billion ringgit subsidy from the government.

"The floor price is one of the agreements in the (MAS) rationalisation plan where no discounting is allowed, except for pensioners, the handicapped, armed forces personnel and the media," said Kamarudin.

"We have asked for fair competition," he added, noting that the low-cost carrier was already barred from plying the lucrative Kuala Lumpur-Singapore route.

"We can't fly the KL to Singapore route. Where is the equal playing field?" he asked.

Kamarudin declined to comment on the impact of the move on the low-cost carrier's revenue but said he did not foresee the rationalisation plan collapsing over the removal of the floor price.

He said AirAsia would be meeting the government to discuss the issue.

AirAsia has been pushing for access to Malaysian domestic routes, saying it can succeed where the national carrier has failed and wring profits from services to rural and small-town destinations.

MAS has said it will now operate 22 domestic trunk services with three new routes to Borneo island as part of its restructuring.