Malaysia's no-frills AirAsia has laid out a bold new expansion plan that will involve more than doubling its fleet, increasing flight frequency and launching international destinations.

Expressing optimism for the airline's outlook after surviving nearly a year in business, AirAsia chief executive Tony Fernandes told AFP the airline was in "for the long haul" and voiced his satisfaction at proving his critics wrong.

"They gave us just three months and then to cease operation," Fernandes said.

Since the airline began domestic flights in December last year, Fernandes said AirAsia had flown 800,000 passengers and was now making a monthly profit of one million ringgit (260,000 dollars).

He said AirAsia was now considered the second largest carrier to fly passengers to the Kuala Lumpur International Airport and the potential for growth in the domestic arena was huge.

"Only six percent of Malaysians fly, hence there is a massive untapped market for AirAsia," he said.

AirAsia currently has five leased Boeing 737-300s in its fleet but Fernandes said the airline had plans to buy eight more, primarily to enable it to increase the number of domestic flights.

"By this time next year, we should have 13 jets," he said, adding AirAsia was looking at either Boeing 737-300s or Airbus 320.

Aircraft of one make

"But we would rather have aircraft of one make only as it will save us on spares. We will likely go for the Boeing."

AirAsia is also intending to expand into international routes, Fernandes said, with neighbouring Indonesia and Thailand the most attractive destinations because it could fly thousands of migrant workers and tourists.

The ownership of the carrier is made of five individuals with Fernandes holding 25 percent. It has a staff of 340 people.

Fernandes said AirAsia would raise funds through current shareholders and was on the lookout for new partners, including foreigners.

"We are not selling part of the present shareholding but will increase the share capital," he said said.

Fernandes said AirAsia had spent 2.5 million dollars in computer technology for its cost saving Internet-based reservation system.

"Our next investment area is to set up an engineering team to service our aircraft," he said.

One big problem faced by some airlines has been the rising cost of fuel but Fernandes said AirAsia had hedged 100 percent of its fuel needs to the spot oil price of 20 dollars a barrel last December.

Business hurt

The biggest problem, he conceded, has been the cost cutting by Malaysia Airlines.

"We are 100 percent low fares. But Malaysia Airlines' price cut of some of its seats (in August) did hurt our business," he said, adding that bookings fell initially.

"But we recovered quickly."

One analyst told AFP if Malaysia Airlines continued to cut prices, it would surely spell trouble for AirAsia. "In any price war, there will only be losers," the analyst said.

However Fernandes is undeterred and warned knockers AirAsia would not fail. "Work the revenue hard and be ruthless on cost. We are in the business for the long haul," he said of his business philosophy. AFP