Costs, not competition, worry Tony Fernandes of AirAsia Bhd, who said today he foresees continued expansion for the Malaysian-based lowcost pioneer.

"The only thing that we worry about is our cost," said Fernandes, the airline's group chief executive.

"There can be a hundred low cost carriers out there. It doesn't really matter as long as we have the lowest cost in the world... then we will have the lowest fares and there's a huge market out there which we are after," he said at the Aviation Outlook conference.

AirAsia began operation as a budget carrier in December 2001 with just two aircraft. It now offers more than 100 domestic and international flights to Malaysia, Thailand, Indonesia, Singapore, Cambodia, Vietnam and the Philippines.

The carrier's budget concept has since been imitated by numerous other carriers in Southeast Asia and India.

But Fernandes said the region-wide network built by AirAsia has given it a headstart on competitors.

He added that sticking to the basics of keeping costs as low as possible in order to sell the market's lowest-priced air tickets has been key to the carrier's success.

Fernandes said AirAsia's success proved wrong sceptics who doubted a no-frills model would work in the region.

The formula has been instrumental in helping AirAsia ride through a series of external crisis that jolted the airline sector including the Iraq war, spiralling crude prices, and outbreak of the killer Severe Acute Respiratory Syndrome in East Asia in 2003, he said.

Rosy five years ahead

"I think the next five years is incredibly rosy for people such as us who have invested early on," he said at the conference organised by the Sydney-based Centre for Asia Pacific Aviation consultancy.

"Despite all the tribulations that we had, we have always been able to find a way around it and I think the underlying factor is that low fares stimulate demand and you can always ride through the storms."

In his speech to delegates at the conference, Fernandes said the airline expects to carry at least 16 million passengers in the financial year to June 2007, up from 9.31 million previously.

AirAsia is considering the purchase of more planes to fuel the carrier's growth on top of the 100 Airbus A320 already ordered, Fernandes said.

"We need more aircraft," he said but gave no further details. The carrier has options on another 30 A320s.

An open skies agreement, allowing foreign airlines to operate unlimited services to another country, is to take effect in Southeast Asia in 2008.

Publicly-listed AirAsia announced in August it earned net profits of RM126.94 million over the year to June, compared to RM111.1 million a year ago.