Budget airline AirAsia hopes to launch flights to Indonesia by the end of the year and to Thailand from January in an effort to boost revenue, officials said today.

AirAsia executive director Kamarudin Meranun told AFP that Indonesia's islands of Sumatra and Java were ideal destinations for the carrier.

"We are doing the due diligence exercise. We are identifying the best destinations in Indonesia and Thailand which offer favourable costs and airports where our 737-300 aicraft can land," he said.

"We could fly to Indonesia as early as the end of the year."

Under pressure

Asked to comment on a statement Wednesday by Transport Minister Chan Kong Choy that AirAsia would fly from Langkawi island to Thailand's Phuket in January, Kamarudin said: "We will definitely try to fly to Phuket in January but it depends on availability of aircraft."

Chan said Prime Minister Dr Mahathir Mohamad and his Thai counterpart Thaksin Shinawatra discussed conducting joint promotions of the two islands when they met on Langkawi in July.

AirAsia has previously indicated that it would like to fly to Singapore as well as Thailand and Indonesia.

AirAsia's chief executive Tony Fernandes earlier told reporters that "there is strong possibility for the carrier to fly to Phuket in January."

"There is pressure on us to do regional routes," he added.

Fernandes said national carrier Malaysia Airlines' domestic promotions since June, in an effort to get passengers back in the air after the Severe Acute Respiratory Syndrome (Sars) outbreak, were biting into AirAsia's revenue.

"We had to lower our prices by some 25 percent to compete with Malaysia Airlines," he said.

Potential destination

Fernandes said plans by Singapore Airlines (SIA) to launch a budget carrier were also adding to the pressure on AirAsia to go regional.

SIA has said it is prepared to convert its regional wing, SilkAir, into a budget carrier to meet any competition for its markets.

"If SIA wants to take us on, we will take them on," he said.

Fernandes last month said that the southern coastal states of India, including Kerala, could be another potential destination, taking into account the close ties Malaysia's Indian population have with India.

AirAsia has placed orders to buy four more aicraft and lease seven, taking its fleet to 18 by the end of 2004.

The airline has flown two million passengers within 18 months of starting domestic operations in December 2001, bucking predictions that it would fail within three months. - AFP