The AirAsia Group is set to spark another fare war with a third daily service to Bali and a second daily flight to Kuala Lumpur within months.
AirAsia founder and chief executive Tony Fernandes said yesterday the airline would continue to stimulate the market with giveaways and heavily discounted fares.
"Unlike other airlines, we have just continued to offer the cheapest fares in the market and we are not putting our prices up like they are," Mr Fernandes said.
AirAsia X, the long-haul division of the group, launched services from Kuala Lumpur to Perth in November 2008 with one-way fares from just $99.
In May last year, the airline's Indonesian division announced a daily Perth-Bali service with 5000 free seats.
That service quickly expanded to twice daily to meet demand.
Mr Fernandes said the group would launch "the third daily Bali flight and second daily KL within three to six months".
But Mr Fernandes, who was once an accountant for the Virgin Express in Europe, would not reveal what the promotional deals would be for the new flights, except to say that the "bargains would keep on coming throughout the year".
"Our philosophy is that once flights are full we don't put up fares, we add more capacity," Mr Fernandes said.
AirAsia is the fastest growing airline in the Asia-Pacific region and world's most profitable, with a profit margin of more than 17 per cent.
AirAsia's announcement comes as new government figures show that domestic air fares have plummeted to all-time lows despite airlines' desperate efforts to increase margins to pre-global financial crisis levels.
The Bureau of Infrastructure, Transport and Regional Economics' 13-month moving average index on the best discount air fare slumped to 60.5 this month, 17 per cent lower than the same month last year.
Only business class fares have risen, by a modest 7 per cent over the past few months, to an index figure of 104.
The air fare index system used by BITRE was started in 2003 at 100 and has shown a decline in discount fares since.
Fares details are collected monthly for the top 70 routes in the Australian domestic network.
, The index for the best economy fare has moved up from 125.8 in 1992 to peak at 142.5 in the late 1990s and has declined to 60.5 this month.The average weekly earnings have increased from $589 in 1992 to $1343 last year.
GEOFFREY THOMAS AVIATION EDITOR
The West Australian