Malaysia's AirAsia, Asia's biggest and pioneering budget carrier today said it plans to launch a low-cost venture in China by the end of 2005.

"We have already began talks with a few potential partners. It is progressing well. We definitely hope to begin operation by the end of 2005," a top company official told AFP on condition of anonymity.

The official said the Chinese business venture would be similar to the Thai AirAsia model.

Thai AirAsia is a joint venture between AirAsia, with 49 percent, and Thai telecommunications giant Shin Corp, owned by the family of Thai Prime Minister Thaksin Shinawatra, which holds 51 percent.

Base in southern China

The official said the planned China carrier would be based in southern China where most of the Malaysian business interests are located.

"We will mount flights to China from Thailand and Malaysia," he added.

Last December, AirAsia announced it would buy 40 Airbus aircraft and exercise the option to buy another 40 A320 jets, adding that it would launch flights to China by March to maintain its position as Asia's leading budget airline.

The new aircraft would be introduced gradually into AirAsia's fleet, including its Indonesian and Thai subsidiaries, with the first due for delivery in January 2006.

AirAsia chief executive Tony Fernandes said previously that Chinese authorities had given AirAsia preliminary approval to fly to China and it expected to start flights by March.

The airline is in the midst of securing approvals to fly to key Chinese cities such as Xiamen, Chengdu, Guangzhou, Chongqing and Hainan from Bangkok through its subsidiary Thai AirAsia.

Fernandes said the first destination in mainland China would likely be Xiamen. AirAsia already flies to Macau, the former Portuguese colony.

Next stop: India

Analysts said AirAsia's entry into China would boost its revenue given strong trade ties and the 2008 Olympic Games in Beijing.

Malaysia was China's seventh-largest export market last year, while the mainland was Malaysia's fourth biggest.

Launched as a budget carrier in December 2001 with just two aircraft, AirAsia has defied the sceptics to become a significant player.

AirAsia currently has 26 Boeing 737 aircraft which will be phased out as the Airbus aircraft arrive.

AirAsia is targeting markets within three hours flight time of its hub, which gives it access to a 500 million population in Southeast Asia, with operations in Malaysia, Thailand and prospectively in Indonesia.

It is also looking to India and the Philippines.