Branson buys 20% stake in Asian low-fares airline

The move marks an alliance between Branson and Malaysian entrepreneur Tony Fernandes, a former Virgin Group employee, who founded the AirAsia brand in 2001 and hopes to transform the region's aviation market.

AirAsia X, launched in January, aims to dramatically expand the market for low-fares long-haul travel - both for leisure and business - by building on the short-haul service of its sister airline AirAsia.

It plans to cover destinations that are more than four hours away from Kuala Lumpur and has already been granted rights to fly to London's Stansted airport as well as Australia's Gold Cost, where the first flights are due to begin by October.

AirAsia X did not disclose how much Virgin paid for its 20 per cent stake in the business.

The budget long-haul market has yet to be proven on a large scale, with many operators doubtful that passengers would be prepared to compromise on space and comfort during longer flights.

AirAsia chairman Seri Kalimullah said: "Building on AirAsia's lead, AirAsia X is uniquely positioned to be a first in truly low-cost, long-haul service and to revolutionise the global aviation industry."

Branson said he looked forward to the opening up of the long-haul budget market. Virgin Atlantic already operates flights to Asia, while it also operates low-fares flights across Australia through its Virgin Blue service.

The news came as it emerged that the number of passengers travelling on Virgin Atlantic had passed the five-million-a-year mark.

However, full-year pre-tax profits were down to 46.8 million, falling from 77.5m in 2005-6