KUALA LUMPUR, MALAYSIA - Now that Malaysia Airlines (MAS) is offering low-cost fares, the time has come for the entire aviation industry in Malaysia to be fully liberalised.

In making the call, AirAsia Bhd's group chief executive officer Tony Fernandes said yesterday that the liberalisation should include allowing AirAsia to mount increased flights to Singapore, fly into the island republic from other points in Malaysia as well as fly to international destinations.

He said AirAsia would immediately appeal to the government for full liberalisation of the routes into Singapore following the move announced on Sunday by MAS to offer low-cost or zero fares.

He said the move by MAS was unfair. 'MAS can give zero fares but I cannot have more flights to Singapore, and that doesn't make sense. You can't keep on whacking AirAsia and give all the advantages to MAS,' said Mr Fernandes, who spoke to Bernama by phone from London, where he is on airline business.

He said that Singapore Airlines (SIA) stands to gain from the increased competition between MAS and AirAsia. 'It is clear that MAS wants to take us on; we are ready to be taken on. We are not afraid of competition; we think competition is good for the consumers as that's what business is all about.'

However, he said, 'competition must be everywhere - not just where MAS chooses it to be. You can't expect us to have one hand tied behind our back while MAS can go wherever it wants.'

He claimed that MAS seemed to have thrown in the towel in the competition against premier airlines such as SIA and Cathay Pacific but was now clearly competing with AirAsia in the only segment in which AirAsia has the advantage: low-cost fares.

Mr Fernandes said such unfair competition would eat into AirAsia's revenue, more so given AirAsia's efforts to promote Malaysia aggressively overseas.

Citing recent advertising expenditure statistics released in Australia, he said AirAsia spent A$320,000 (S$408,000) to promote Malaysia's tourism industry but MAS spent only A$4,000 while SIA spent A$1.2 million to promote Singapore.

In what is clear evidence that MAS was competing against AirAsia and not other premier airlines in the region, he said the national carrier had brought its products down to a level where AirAsia - even as a low-cost carrier (LCC) - feels it is as good or even better than MAS in various fields.

However, he said AirAsia, which could be regarded as a national carrier, 'cannot be defeated by fares as its cost structure was clear'.

'Airlines that divert from their traditional model will pay the price. You are either a premier airline or an LCC - it is hard to be in between. You cannot have a cost structure of a low-cost carrier if you have business and first class. It is not feasible,' he said.