SINGAPORE - Cut-price Malaysian airline AirAsia will expand its routes into neighbouring Singapore only if it can secure cheap operational costs in the island-state, the carrier's chief executive said here today.

Tony Fernandes told reporters while on a short visit to Singapore to explore business opportunities that high costs at Singapore's Changi airport were the biggest obstacles to AirAsia's expansion plans here.

"The key to this airline's success is price," Fernandes said.

"For us to be able to cut prices we have to have low costs. Singapore right now only offers us Changi Airport, which is an expensive airport for an airline such as ours."

Fuel factor

Fernandes said the price factor was not just a matter of landing costs at Changi but also of "intangibles" such as runway queuing times and aircraft parking allotments.

"You may end up behind five jumbo jets waiting to take off. That's a lot of fuel for us (to be) burning.

"We may end in a remote parking bay that could take us 10 minutes or 15 minutes to taxi. That again is extra fuel," he said, adding: "If the cost is right we will be in Singapore."

Fernandes said the secondary and lower-cost Seletar airport in the north of the island could be an option.

AirAsia last week announced three foreign partners would inject 26 million dollars to enable the carrier to expand regionally although Fernandes said then that the airline was in no rush to open routes out of Malaysia.

"We still have more routes in Malaysia to cover. I believe it will take another two to three years for us to get a firm footing before we go regional," he said.

New fleet

AirAsia announced this month it would acquire 11 Boeing 737-300 aircraft, with seven of them leased, in line with its regional expansion plans.

This will bring AirAsia's fleet to 18 aircraft by the end of 2004.

AirAsia's success has sparked similar plans from other operators, with Singapore Airlines floating plans to enter the budget carrier market.

Former SIA managing director Lim Chin Beng has also begun moves to set up a regional budget airline, ValuAir, to operate out of Singapore. - AFP