Monday January 1, 2007

Top low-cost airline bosses to form global network

By WONG SAI WAN

KUALA LUMPUR: Three of the world’s main low-cost airline personalities are teaming up to start a long-haul budget airline company based in Malaysia that will offer airfares as low as RM100 for flights between China and Malaysia.

Sir Richard Branson of the Virgin group, Sir Stelios Haji-loannou of EasyGroup, the parent of EasyJet, and Datuk Tony Fernandes of AirAsia are in discussions to form an alliance to realise a deal that will see the formation of the world’s first low-cost global network.

The joint venture, according to industry sources, will first fly between Kuala Lumpur and destinations like Manchester in Britain, Sharjah in the United Arab Emirates and Amritsar in India.

As for China, the new team will aim for Hangzhou, near Shanghai, and Tianjin, near Beijing.

“The fare Malaysians and the rest of the world will be looking at is as low as RM100 for destinations in China,” said a source familiar with the discussions.

For flights between the low-cost carrier terminal (LCCT) and London, the partners are thinking of fares between RM300 and RM2,500.

Branson's Virgin group includes budget carriers Virgin Express and Virgin Blue.

Stelios founded EasyJet, one of the world's most successful budget carriers.

Fernandes is the brains behind AirAsia, the first no-frills airline and easily the most successful in Asia.

Industry sources said the combination of the three personalities, their companies and contacts would be “lethal.”

The link-up with Virgin and Easyjet will give AirAsia access to London's Stanstead airport.

The alliance could also use London's Luton airport as a hub because Virgin already operates a rail link between the airport and central London.

“The landing cost at London's Heathrow Airport will be too expensive for a no-frills airline, but there is the possibility of landing at Gatwick, which has become a hub for several European low-cost carriers.

“But then again, AirAsia could give London a miss and go for Manchester, as AirAsia is a known brand there. It is the official Asian low-cost carrier for Manchester United,” said another industry insider.

For Virgin and EasyJet, the link-up will grant access to KLIA's LCCT, a dream Asian hub for their Europe to Australia via Asia routes.

Fernandes, when contacted, would only say AirAsia was focused on its present short-haul model “where we have much work to do.”

“Let's wait and see,” he added.

AirAsia is set to make a major announcement this week and many are speculating it has to do with the long-haul business.

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