AirAsia offers free Thai tickets

Discount airline AirAsia has launched special fares to lift Thailand's tourism industry in the wake of the bloody political clashes in Bangkok that prompted the Australian government to warn travellers to avoid the capital.

AirAsia is offering a limited number of free flights from Bali to Bangkok, and $10 fares from Kuala Lumpur to the Thai capital to entice travellers.

This latest move comes as new market research shows Australia's domestic tourism is on the slide.

The AirAsia offer is part of a sale of 10,000 seats between Bangkok and Asian cities in Malaysia, Burma, Cambodia, Singapore, Vietnam, China, Taiwan and Indonesia, with fares costing up to $38 one-way.

As a regional carrier, AirAsia's chief executive Tony Fernandes said he felt "duty-bound" to help Thailand "bounce back".

Bookings open today until June 1, for travelling between June 7 to August 31.

The move comes as Tiger Airways launched another fare blitz across Australia, with fares as low as $9, taxes included.

Tiger Airways' spokeswoman Vanessa Regan said 14 out of the airline's 19 routes were on sale for less than $40, and nine of them under $30.

The Melbourne-Sydney sale fare is $18.50 one-way, for example, or to the Gold Coast for $33.50.

There are "tens of thousands" of seats on sale until midnight on May 31, for travel between June 1 and August 31.

Tiger Airways chief executive Tony Davis recently vowed to keep pushing domestic airfares down as he announced a $22.7 million profit for the airline group, with the Australian operation breaking even on an operating level, despite fuel-hedging losses, with three profitable quarters.

Virgin Blue, for one, is feeling the heat of cut-throat competition.

The carrier told investors today its likely net profit before tax and exceptional items for the 2010 financial year could be between half and a quarter of its most recent advice.

It now said net profit before tax and exceptional items would be in the range of $20-$40 million.

Earlier this month, Virgin Blue said it had been expecting a result of $80 million.

The carrier's shares nosedived this morning after the airline said average fares were seen falling 10 per cent.

The airline blamed "rapid deterioration and increased volatility in the operating environment, particularly in respect of the leisure segment both domestically and internationally." as well as "an unexpected and sudden decline in consumer confidence" and "increased industry capacity".

Whether low domestic airfares are enough to bring back consumer demand and revitalise Australian tourism remains to be seen.

Latest Roy Morgan Research released yesterday found only 12 per cent of Australians surveyed said they would like to holiday in Sydney over the next two years; 13 per cent said the Sunshine Coast; 19 per cent said Melbourne; and 21 per cent said the Gold Coast.

"Australians increasingly want to holiday overseas and as a result most domestic destinations have lost appeal for Australians," said Jane Ianniello, Roy Morgan Research's international director for tourism, travel and leisure sectors.

"Melbourne is the exception, having lifted its preference level over the past decade."