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New low-cost carrier eyes Aussie destinations

New long-distance budget airline Air Asia X says it will announce its first Australian destination within days, and its promotional fares to London will be as low as $11.30.

The carrier – an offshoot of Asia's biggest low cost airline Air Asia – hopes to fly to Australia for its inaugural flight from its Kuala Lumpur base in September.

It expects to offer Australians standard fares 30 to 50 per cent cheaper than its competitors, to the Malaysian capital, and then a host of far flung places, including the UK, Middle East, India and China.

Air Asia X's new chief executive Azran Osman-Rani is in Australia this week holding final talks with airports around the country.

"This week is going to be key in terms of making some decisions and we may be in a position to announce our first destination in the next few days," Osman-Rani told AAP.

Air Asia X is eyeing Avalon, in Victoria, Adelaide, the Gold Coast and Newcastle for its first Australian destination, he said, adding the airline could expand to service "two or three" other destinations soon after its launch.

However, Newcastle was "unlikely" to be the airline's first Australian entry-point due to ongoing issues with the government.

"(Newcastle is) the key base for the Royal Australian Air Force, and it just means a lot more arrangements need to be put in place … but we definitely remain interested and will (continue) discussions with the airport," Osman-Rani said.

He added: "I think one of the key factors is going to be the state of readiness of the airport, because some of these airports are going to need to be upgraded to accept international flights."

Air Asia X has leased one plane and is looking for a second, while it awaits its order of 15 new Airbus 330s, due to come on line late next year.

Osman-Rani said Australia would "very, very likely" be the airline's first destination, although discussions are also underway with two cities in China and one in India.

"Obviously Australia is appealing for us just from an operational simplicity, because it is an English-speaking market, it is also a market that is very used to low-cost travel and very internet savy," he said.

"Interestingly enough, Australians today are one of the top six nationalities that already use the Air Asia website.

"There is already a reasonable degree of familiarity with the brand, that makes the launch a lot easier here than say China."

Osman-Rani, who has been in the top job for just a few weeks, said the airline was trying to attract passengers who had never flown before with its low prices.

Promotional fares would include $US10 ($A11.30) flights to London on selected flights, but regular fares would still be significantly cheaper than full service carriers, he said.

"It would not be unreasonable to expect fares at 30 to 50 per cent lower than the average fares on full service carriers," he said.

The low fares were possible because of the airline's lower-cost model, its more frequent use of its planes and greater numbers of seats on the aircraft, he said.

"If you have got 100 more seats on a plane and that plane travels 40 per cent more frequently, that creates a much bigger revenue base on the same aircraft cost," Osman-Rani said.

AAP

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