National flag carrier Malaysia Airlines today said it can launch a no-frills carrier in six months if the situation merits but it would not rush into the budget sector as its current operation was still competitive.

The airline has submitted a preliminary proposal to the transport ministry and it has also explored the possibility of establishing a joint venture with other regional carriers to create a low-cost carrier, managing director Ahmad Fuaad Dahlan said.

"We are ready and we can set it up within six months. If the ground rules change, we will go in but at this point in time, I don't think we want to dabble in it," he told national news agency Bernama .

The airline is constantly reassessing regional markets, especially with increasingly deregulated airways in Asia, and will swing into action if it needs to, he said.

Fuaad stressed that any move by the national flag carrier to enter the budget sector would be based purely on business viability and would not be aimed at destroying its rival, in an apparent reference to ambitious no-frills carrier AirAsia.

"We believe in peaceful co-existence and welcome healthy competition. We have been keeping quiet over a number of false remarks about us which also imply that we are a big bully in a David and Goliath scenario," he said.

"We are not here to play to the gallery and discredit our competitors. We want to be focused on what we are doing like continuing to build on our strengths to face new and complex challenges."

Stable fares

Fuaad said air fares were likely to remain stable because "regulators don't have an appetite for fare increases anymore. They would like to see stimulation of the market instead."

Malaysia Airlines is expected to improve its performance this fiscal year after a 37 percent year-on-year surge in net profit to RM461.14 million for the year to March 2004. The result was its best showing since the airline's listing in 1985.

Fuaad said the airline planned to expand to new destinations in China and India soon.

"We cannot be complacent and want to do more. We have to expand, if we don't, we'll lose our footing," he said.

Over the next six months, Fuaad said the carrier would also embark on a RM700 million refurbishment program for 32 long and medium-haul aircraft and would soon overhaul its in-flight meals to improve services.