The alliance, said to be the brainchild of Malaysia's AirAsia founder Tony Fernandes, who presides over two low-cost carriers (LCCs) in Asia, will involve combining his AirAsia group and Fly Asian Express (FAX) with Richard Branson's Virgin group and Stellios Haji-loannou's EasyJet group.

As of Wednesday, just as the speculation started to spread, according to Bloomberg.com, AirAsia had already reaped some immediate benefits, as it saw its stock climb 7.3 per cent to 1.66 ringgits (Bt17), the highest level since October 16.

The tie-up with Virgin and EasyJet is a vital step for AirAsia's ambition to offer long-haul budget flights between Asia and the UK and Europe.

It will grant the AirAsia group carriers flight access to cheaper UK airports such as Stansted, Luton and Gatwick, in addition to Manchester, which the carrier can call its British home port due to its sponsorship of Manchester United Football Club.

AirAsia, which has been granted landing rights in China, plans to offer to the alliance flights to Hangzhou, near Shanghai, and Tianjin, near Beijing, selling tickets as low as US$30 (Bt1,070).

The year 2004 saw the introduction of the cross-border joint venture LCC, according to Peter Harbison from the Centre for Asia-Pacific Aviation. "2007 will see the next phase in global aviation - lucrative long-haul markets," he said.

Qantas, through its Jetstar subsidiary offering budget flights, recently moved in that direction with its first flight from Sydney to Hawaii in the US.

After getting the Malaysian government's backing to slice up the domestic market with his AirAsia no-frills flights, Fernandes is said ready to take on "backyard bully" Malaysia Airlines in the long-haul market.

Technically, an LCC is restricted to operating in short distances for economic reasons. The cross-border, cross-continent expansion would mark a change in the LCC business model.

A few budget airlines have tried their hand at flying long distance. For instance, Phuket Air had to cancel its Bangkok-London flight as the result of its old fleet and high cost. "I believe it is just a matter of time before someone comes up with a good model," Fernandes said. "This would complement our efforts to turn Kuala Lumpur International Airport into the LCC hub of the Far East."

FAX is believed to be talking with several parties for the lease or purchase of wide-body planes to be operated in the manner of Oasis Hong Kong Airlines, the first budget carrier to offer such flights from Asia.

Airline analysts believe the combination of AirAsia and FAX, which have common ownership and share a central booking system, is now ready to slice up the route. It is being seen as a catalyst for a new market segment for long-haul flights, similar to those offered in Europe for flying over the Atlantic.

Operating from its own purpose-built low-cost carrier terminal at Kuala Lumpur, AirAsia will also have the advantage of operating from the country's newly opened second low-cost terminal at Kota Kinabalu, in Malaysian Borneo.

Borneo-based FAX is the operator of rural services in the Malaysian states of Sabah and Sarawak for AirAsia, following restructuring of Malaysia's air services.

As the "official low-fare airline for Manchester United", AirAsia, along with Tourism Malaysia, is now in its second year of sponsorship with the world's best-known football club. Last May the carrier flew its Red Devil A320 aircraft, painted in the club's colours and featuring some of its personalities, to Manchester on a promotion flight. The club has scheduled a match in Malaysia this year during its Asian tour as part of the Visit Malaysia 2007 celebrations.

With a confirmed order of 100 Airbus A320s plus an additional 30 on option, AirAsia is on course to have the most modern and youngest fleet in the world.

The Nation, Agencies