THE Malaysian budget airline AirAsia X plans to double flights to Australia within the next two years, in a major challenge to Jetstar in its home market.
A month after Singapore Airlines' new budget offshoot, Scoot, began flying to Australia, AirAsia X revealed that it plans to operate daily services to Sydney, Melbourne and Perth from the Malaysian capital of Kuala Lumpur by the end of 2014, as it boosts its fleet of twin-aisle A330s from 11 to 25 planes.
However, the proposed increase in services will depend on the Malaysian government securing more air rights from Canberra. AirAsia X and Malaysia Airlines have almost reached their quota of flights under a bilateral agreement between Australia and Malaysia.
The chief executive of AirAsia X, Azran Osman-Rani, said it was possible the airline would increase services as early as next year from once a day to twice to Sydney, Melbourne and Perth. He indicated it would be longer before the airline increased services to the Gold Coast, which it flies to five times a week.
''Getting through the diplomatic processes takes time,'' he said in Sydney yesterday.
AirAsia X and its parent, AirAsia, are in a race with Jetstar for scale - what Mr Osman-Rani described as a ''real estate game'' - in Asia. Shares in Jetstar's parent, Qantas, closed below $1 yesterday for the first time since shortly after its shock profit downgrade last month.
The AirAsia X boss emphasised that the airline would focus on increasing flight frequencies to Australia before it considered beginning services to a fifth destination here - most likely Adelaide.
Despite the high Australian dollar making this country a more expensive destination, Mr Osman-Rani said there remained considerable potential to boost the number of tourists travelling here from Asia.
''What tends to happen is that when [there] is a steady exchange rate, people get used to it. Where the panic sets in is when it is on an upward trajectory,'' he said.
But he said Australia needed to rethink its sales pitch to Asian tourists who believe a holiday here is too expensive because of the way it is marketed in Asia.
Giving an outsider's perspective of Australia's latest ad campaign, Mr Osman-Rani said the tourism industry needed to be more tactical in convincing Asians to travel here for holidays, rather than relying on a ''very strong brand campaign that might seem out of reach for a lot of people''.
Tourism Australia launched a $180 million global advertising campaign overseas for the first time last month, choosing Shanghai as the stage for it in an effort to tap into China's emerging middle class. Mr Osman-Rani said the visuals in the campaign, ''There's nothing like Australia'', seemed to focus on a ''very, very high niche'' which appeared to put it out of reach for potential Asian tourists.
The managing director of Tourism Australia, Andrew McEvoy, rejected Mr Osman-Rani's views.