AirAsia said today it had sealed a deal to get some business from the Malaysian government, which currently only flies civil servants on state-owned Malaysia Airlines.

"We hope to secure up to 50 percent of the government expenditure on air tickets," the budget carrier's chairman Aziz Bakar told reporters.

"It will contribute 20 to 30 percent to our bottom line."

Tour operators estimate the government spends about RM500 million annually on flights for the nation's one million civil servants.

AirAsia, launched in December 2001 with just two aircraft, has become the region's biggest low-cost carrier and is in fierce competition with Malaysia Airlines.

Top officials from the two companies have been engaging in an increasingly bitter war of words and have withdrawn the discount offered to each other's chairmen, one of the genteel traditions in the cut-throat aviation industry.