Low-cost carrier AirAsia said today it plans to fly to Asia's booming economies of China and India in early 2007 as Malaysia liberalises its aviation industry.

Mohamad Azmi, the budget carrier's chief financial officer, told AFP that AirAsia could now pick up new regional routes after the government allowed rival Malaysia Airlines to offer discounts on domestic services.

"Now it is free competition. We are comfortable with this environment. We can probably fly to the lucrative markets of China and India in 2007," he said.

Azmi described India and China as markets with huge potential and "we foresee the positive impact ... on our bottomline."

AirAsia, which has already said it hopes to fly to China's southern cities of Guangzhou and Shenzhen, would probably fly the new routes from its Borneo island hub of Kota Kinabalu in Sabah state, he said.

The budget carrier said yesterday that the government had "handed AirAsia access to fly to India and China."

It also said the government would monitor domestic ticket pricing by Malaysia Airlines to ensure "a level playing field" and "no predatory pricing environment."

"We anticipate some very positive developments in terms of domestic airports and foreign route access," it said in a statement.

Share price plunges

Azmi said the carrier was targeting all Asian capitals including Singapore and leisure destinations where there was a sizeable movement of people.

Under a new aviation policy which takes effect on August 1, AirAsia is to take over 99 of Malaysia Airlines' domestic routes, many of which are currently losing money.

The AirAsia share price fell sharply after the controversial decision by the government just over a week ago to allow Malaysia Airlines to offer discounts on its remaining 22 domestic routes despite strong opposition from AirAsia.

AirAsia, which was listed in November 2004, plunged 12.2 percent last week to RM1.30 (US$0.36) on Friday - the lowest level in one-and-half years.

On Tuesday, the stock was firmer at RM1.32.

Azmi said despite challenges posed by rising fuel prices and fears of a possible price war, the carrier's growth plan remained intact.

"Come August, when rationalisation begins, we will have more routes to fly. It will accelerate our growth plan," he said.