The first Boeing 737 jet operating Air Asia's flight from Bangkok arrived in Macao Monday, marking the launch of the first low-cost flight to Macao.

Malaysia's Air Asia brought a low fare war to Macao in June by announcing a fillip of 10,000 seats at 149 patacas (about US$19) one way upon the launch of the Macao-Bangkok route on July 5.

"Air Asia sees Macao as a tourists attraction. It is unique as it is positioned as the gateway to Hong Kong and south China," said Tony Fernandes, group chief executive officer of Air Asia.

He said that Air Asia chose Macao over Hong Kong and other cities as its regional hub close to the projected market of China's mainland because the Macao International Airport provides facilities and services more suitable for the operation of low-cost airlines.

Upon the first launch of business in Macao, Air Asia set the normal two-way fare at 436 patacas (US$54.5) on its Macao-Bangkok route to become the first low-cost airline in Macao.

With an aim to gradually increase flight frequency to four flights a day, Air Asia plans to record over 10 million passengers via the Macao airport in the next 10 years.

The exposure of the low-cost airline forced the local carrier Air Macao to respond with a sharp price-reduction, cutting the price of two-way fare on the Macao-Bangkok line from 3,640 patacas(US$455) to 435 patacas (US$54.4) on a summer promotion starting from July 5 to Oct. 30.

Industry insiders held that Air Macao would suffer a lot if it is pegged in a long-time price war with Air Asia, as it would find it hard to reduce the operating cost.

Air Asia is famous for its low-cost operation tricks, which are characterized by ticket less and non-frill flights.

(Xinhua News Agency July 6, 2004)