Budget airline AirAsia today said it will start flying between Kuala Lumpur and Johor state near Singapore on Oct 22 for less than the fare of a second-class train ticket.

In preparation for the launch, AirAsia signed an agreement today with postal operator Singapore Post (SingPost) to sell airline seats in its first step to market the carrier outside its homebase.

The fast-rising no-frills carrier will operate two flights daily between Kuala Lumpur International Airport and Senai Airport in Johor for as low as 9.99 Singapore dollars (RM20) one way, AirAsia chief executive Tony Fernandes said.

The cost is cheaper than a RM30 second-class train ticket between Singapore and Kuala Lumpur and far less than the 394 Singapore dollars (RM788) charged by major airlines for a full Singapore-Kuala Lumpur ticket.

A bus trip between Senai and Singapore's central business district takes about one hour and costs about RM4.

Encouraging response

Fernandes said AirAsia plans to expand the flights to link Senai to other parts of Malaysia.

Under the agreement with SingPost, the Singapore postal operator will initially clear five branches as well as its automated machines to accept bookings and payments for AirAsia seats.

Passengers can pay over the counter at SingPost outlets, self-automated machines and through the Internet.

SingPost has a client base of about two million people and offers a wide array of services, including payment for power and telephone bills.

Fernandes said 10,000 tickets at 9.99 Singapore dollars each had been offered for Oct 22 to Nov 14 and most of them had already been bought.

"It's our first step oputside of Malysia in distrbuting our product," Fernandes said. "The response has been way over over our expectations."

Good progress

Fernandes also said talks with Singapore's Changi Airport for concessional rates that would allow AirAsia to establish a hub there were underway, with the latest meeting held on Wednesday.

"We had a great meeting today, we are making good progress," he said.

"Everything we do is new and when we go on in and ask for these things (lower rates) it's been a culture shock (for Changi) so these things take a bit of time but I'm really optimistic about Changi."

Some aviation analysts say that AirAsia could eat into the market of Singapore Airlines (SIA) or its regional wing SilkAir.

SIA has said it is prepared to convert SilkAir into a budget carrier to meet the competition. - AFP