Budget carrier AirAsia today said it is unfazed by a looming dogfight over Southeast Asian skies as rivalry heats up after Australia's Qantas entered the fray this week.

The profitable airline's executive director Kamarudin Meranum told AFP that the emergence of other budget carriers would not hurt its business despite the possibility of fierce competition.

Qantas Airways Ltd announced Tuesday it has teamed up with the Singapore government and two other investors for a low cost airline, which is yet to be named and is due to start operations in May.

Two other low cost carriers that are also expected to crowd regional skies by year end are Singapore Airlines' 49 percent-owned carrier Tiger Airlines and privately owned Valuair.

"I don't see them as a threat. Instead it is a honour for AirAsia that others are following our success story," he said.

Own pace

Kamarudin said AirAsia would not rush into its expansion plans including its planned initial public offering (IPO) later this year as other budget carriers appear.

"We will proceed with out development programmes as planned. We will do it at our own pace. We are confident, these new set-ups will not hurt our business," he said.

Citing an example, Kamarudin said its maiden flight to Indonesia's capital on Saturday from the southern Johor state was completely booked. "Even our flight on Sunday is full."

AirAsia charges just half of the RM820 fare imposed by national carrier Malaysia Airlines and Garuda Indonesia.

Some AirAsia tickets for Indonesia's start as low as US$23.

"We are doing our best. God willing we will succeed in Indonesia too," Kamarudin said.

AirAsia already flies to Thailand and Singapore.

Expansion

AirAsia had named BBMB Securities as the third bookrunner for its IPO, expected to be launched in September, after earlier appointing Credit Suisse First Boston and RHB Sakura Merchant Bankers.

AirAsia plans to invest RM228 as it builds up its fleet to 30 aircraft by year's end from the current 14.

The two-year-old Malaysian company has become Southeast Asia's version of European budget carrier Ryanair. It has carried more than four million passengers since it was launched in December 2001.

Azrul Azwar, economist with MIDF Sisma Holdings Sdn Bhd told AFP that despite competition emerging among the low cost airlines, AirAsia holds high ground since they are already operating their business with success.

"I think AirAsia will fly well ahead of others. Others have not even began their operations" he said.

Azrul said AirAsia's IPO issue would be well taken-up although Asian skies would be crowded.

"Their IPO will command a good take-up. The company is the pioneer in low cost airlines in Asia," he said.

Azrul said AirAsia would do stand itself in good stead due to its efficient management policies and rich cash base, as it forges a market in Indonesia.

"Definately, Indonesia is a lucrative market. Imagine there are some one million Indonesians working in Malaysia. It means they already have a captive market and with their low rates, there will be a scramble for its seats," he said. - AFP