KUALA LUMPUR : Malaysian budget carrier AirAsia will double its A320 fleet size to 200 jets amid growing passenger demand and route expansion in Southeast Asia, an industry source has said.

Three indivdual shareholders from AirAsia and Fly Asian Xpress (FAX) will form an alliance to start the long-haul service to London and China as early as July using three aircraft - a combination of Airbus A330s and Boeing 777-300s.

An announcement to double AirAsia's fleet would be made in the weeks ahead while on Friday AirAsia and FAX would hold a press conference at 0230 GMT regarding its long-haul ambitions, the source said.

"Certaintly, there is a need for another 100 A320 aircraft. AirAsia will be putting in its orders to meet growing demand.

"It is estimated to cost billions of dollars. Deliveries may start in 2012 or earlier once the original 100 aircraft are delivered," the source, familiar with the plans, told AFP on condition of anonymity.

AirAsia now has a fleet of 50 aircraft - 15 A320s and 35 Boeing 737-300s and has opted for Airbus in order to reduce costs with a fleet of just one single type of jet.

It currently has orders for 100 A320s.

AirAsia boss Tony Fernandes has a 50 percent stake in FAX which operates rural air services in Sabah and Sarawak on Borneo island.

The other two shareholders in FAX are AirAsia deputy chief executive Kamarudin Meranum, who owns 30 percent, and Raja Mohamad Azmi with 20 percent.

The industry source said the long-haul service will be provided by a new carrier initially owned by Fernandes, Kamarudin and Azmi, adding that it had secured initial routes to London and China.

Tony Fernandes, AirAsia's chief executive officer, earlier said that there was huge potential for a budget long-haul air service.

"It is just a matter of time before someone comes up with a good model for a low-cost carrier and I hope the innovation would come from Malaysia," he was quoted as saying by the newspaper Saturday.

The industry source said talks with other players to participate in the budget long-haul service have been on-going.

"The point is we have been always talking," he said.

The Star newspaper reported this week that AirAsia is planning to team up with Richard Branson's Virgin Group and EasyJet to launch "the world's first low-cost global network".

A source familiar with the discussions told the Star that fares on the long-haul network for destinations in China could be as low as 100 ringgit (28 dollars).

Fares to Britain will be between 300 ringgit and 2,500 ringgit, about half the price of the normal ticket on a regular airline.

National carrier Malaysia Airlines currently operates 18 times weekly to London and charges up to 5,000 ringgit (1,420 dollars) for economy class and 18,000 ringgit for business class.

AirAsia was launched as a budget carrier in December 2001 with just two aircraft.

It now offers more than 100 domestic and international flights to Malaysia, Thailand, Indonesia, Singapore, Cambodia, Vietnam and the Philippines. - AFP/ch