Four years after it took to the skies, Asia's biggest long-haul budget carrier AirAsia X has proved sceptics wrong and is now set on a major expansion.

In its short life, the airline has survived high oil prices, economic crisis, natural disasters and outbreaks of disease such as bird flu, all of which have wounded much more established regional carriers.

Now the carrier is planning to spread its wings to more destinations in the Asia Pacific and Middle East markets where it believes there is enormous untapped demand, chief executive Azran Osman-Ali told AFP in an interview.

air asia plane 280907 "The market we are creating from scratch has a very strong trajectory irrespective of the short-term turbulence that we are seeing right now," he said.

"Our continued rapid growth trajectory is testament to the breakthrough long-haul model that we have pioneered, which unlocks significant latent demand that exists between Southeast Asia and the major markets in North Asia, Australia, India, Middle East and Europe."

AirAsia X has outlived several low-cost, long-haul airlines that have gone bust in recent times including Canada's Zoom, British-based Flyglobespan and Hong Kong carrier Oasis.

The long-haul "no frills" model was pioneered by Laker Airways, founded by British entrepreneur Freddie Laker, which folded in 1982 after failing to survive a recession.

Unlike its short-lived modern counterparts, the Kuala Lumpur-based AirAsia X has managed to keep its fares low, and its planes full on routes that are popular with families and cost-conscious business travellers.

It currently flies to 15 destinations - London, Taipei, Tehran, Paris, Seoul, Tokyo, China (Tianjin, Hangzhou, Chengdu), Australia (Gold Coast, Melbourne, Perth), India (Mumbai, Delhi) and New Zealand (Christchurch).

Government's attempts to shield MAS

Its phenomenally successful sister airline AirAsia handles regional routes under three hours' flight time.

AirAsia X is applying to fly to Beijing, Istanbul, Jeddah, Osaka, Shanghai and Sydney - although it is having trouble breaking the Malaysia Airlines stranglehold on the lucrative KL-Sydney route.

"We are negotiating with the Malaysian government for the Sydney route. We do not know when we will fly. We want to fly to Sydney as soon as possible," Azran said.

air asia pc labu low cost carrier terminal lcct 080109 fernandes explains AirAsia founder Tony Fernandes (right) has complained publicly about the Malaysian government's attempts to shield Malaysia Airlines from competition, and inadequate facilities provided by the national airports authority.

The budget terminal in Kuala Lumpur where both the airlines operate from is perennially crowded and facilities are few, but despite the spartan conditions and lack of a train link to the city, the customers keep coming.

The planned route expansion will be rolled out alongside a major fleet expansion, triggering plans for for AirAsia X go public next year to raise financing for the wide-body Airbus fleet.

It currently operates nine Airbus A330s and two Airbus A340s. By 2019, it hopes to have a fleet strength of 25 A330s, three A330-200s and 10 A350s.

Azran said the carrier will focus on connecting big cities in the Asia Pacific region.

"This is where the growth is coming from. We see the six key markets to connect Southeast Asia to are Australia, China, South Korea, Japan, India and the Middle East," he said.

"These are markets with a large population base and many are experiencing rapid economic development, and are currently significantly under-served by long-haul airline services, resulting in limited direct competition."

Investors' favourite airlines

It is all a long way from 1997 when the carrier, with just one aircraft to its name, launched to a wary reception.

Standard & Poor's Singapore-based analyst Shukor Yusof said the sceptics pronounced AirAsia X was doomed from the start based on the failure of budget carriers in the US and Europe.

"They said fuel and staff costs would escalate as they launched the long-haul flights and the airline would require more money to maintain its old aircraft," he said.

But AirAsia launched more medium-haul flights with shorter turnaround times and invested in new planes, enabling them to maximise the utilisation of its fleet, Shukor said.

He tipped a strong IPO for the airline, which counts Richard Branson's Virgin Group as a 20 percent owner, because the already-listed AirAsia is "among investors' favourite airlines in this region".

Chris Eng, head of research with local brokerage OSK Research said that a solid management would continue to give the airline the best chance of survival in its tough category.

"If anybody has a chance to succeed as a low-cost carrier, it will be AirAsia X. I said this four years ago and I still maintain it," he told AFP .

"They have the lowest per ASK (available seat per kilometer) and the drive for success by the owners of the company is as fresh as ever."

In the first quarter of 2011, the airline posted an 81 percent load factor, an increase of six percentage points from the same quarter last year.

It broke the RM1 billion revenue mark in 2010, its third year of operation.

- AFP