Budget carrier AirAsia has confirmed that it had "exploratory talks" with Singapore rival Valuair but said it would not be entering into a partnership with the airline.

In a statement to Malaysia's bourse, AirAsia said it "only engaged in exploratory discussions with the company.

"Any information obtained from Valuair was for the purpose of preliminary discussions," it said in a response to media reports that AirAsia was in talks to buy Valuair.

AirAsia Chief Executive Officer Tony Fernandes told reporters in Hong Kong yesterday that the two airlines would not link up and cited different business approaches, Bernama reported.

"Our approach has been strictly no frills," said Fernandes, who signed a sponsorship deal in Hong Kong with British football club Manchester United as its official budget airline.

Singapore's Business Times newspaper reported this week that Fernandes and Valuair chairperson Lim Chin Beng had met to discuss an AirAsia proposal to buy Valuair for US$12 million.

Profitable player

Aviation analysts have said that AirAsia has better prospects elsewhere in the region, particularly in China and India, than in Singapore which is a highly competitive and regulated market.

AirAsia, which launched in 2001 with just two aircraft, has become the most profitable player in the sector.

It's success has spawned a number of imitations by startled national carriers as well as a host of new low-cost entrants in Southeast Asia and India.

It is now Southeast Asia's biggest low-cost carrier in terms of fleet size and derives much of its business within Malaysia. It also operates in Thailand, Indonesia, the Philippines and China.