KUALA LUMPUR (dpa) – Asia's largest budget carrier AirAsia is poised to exploit the financial floundering of some of the region's mighty flag carriers to become South-East Asia's top airline.

Known for its unorthodox methods in the face of challenging situations, AirAsia has gained a big chunk of the market share at the expense of larger, more expensive carriers in the last two years of a recession-plagued economy.

''Especially in bad economic times, you've got to deliver value, which means controlling the cost of flying,'' said Andrew Herdman, director-general of the Association of Asia-Pacific Airlines, or AAPA.

AirAsia has posted profits of 130.1 million ringgit ($37.2 million) and revenue of 740 million ringgit in the third quarter of 2009.

''AirAsia has benefited during this past two years of recession because most of its business is focused on short haul, and of course they work on a lowcost structure,'' Herdman said.

When other airlines were scrambling to cut routes and adjust capacity with the rise in global oil prices, AirAsia became one of the first airlines in the world to launch a no-fuel-surcharge scheme in 2008.

The airline also periodically offers free seats to selected destinations AirAsia in January teamed up with Australia's Qantas Airways low-cost carrier Jetstar Airways, an alliance expected to save the two companies A$100 million (US$90.8 million) and 200 million Australian dollars respectively per annum, AirAsia chief executive Tony Fernandes said.

The airlines, which have 145 planes between them, are to pool aircraft parts, buy planes together and have reciprocal arrangements for looking after stranded passengers.

''Given our business model, we are obsessed with keeping operational costs down,'' Fernandes told the German Press Agency dpa.

''There is no doubt that we've gained market share at the expense of legacy carriers during this economic downturn,'' he said.

''But that's mainly because AirAsia offers tremendous value - and value is what consumers are looking for in these economic hard times.''

''We have brand-new aircraft, a fun and friendly crew, hot food, leather seats and high-quality service that rivals or even exceeds that offered by legacy carriers,'' he said.

He said government bail-outs of flag carriers in the past have proven largely to be unfruitful, adding that one of the secrets to AirAsia's successes has been its ability to take chances in challenging circumstances.

''I'm philosophically opposed to bailouts. I believe in free and fair competition on a level playing field, and if a company can't compete, then market forces should be allowed to decide its fate,'' he said.

Fernandes said 2010 would see AirAsia further expanding its presence in the region, and focusing on routes within the Association of Southeast Asian Nations (ASEAN).

''While most people are looking to India and China, I am firmly convinced that the ASEAN region holds tremendous economic potential.

We have a market of almost 600 million people, and this is our own back yard,'' he said.

''We are expanding routes from our hubs in Thailand and Indonesia, while adding five more cities in India - Mumbai, Delhi, Hyderabad, Bangalore and Chennai - to the four to which we already have services,'' Fernandes said.

The carrier's focus on the region has been hailed by aviation analysts, who predict that a recovery in the industry would be helmed by the Asia- Pacific region.