Originally founded by government-owned conglomerate DRB-Hicom, the heavily indebted airline was purchased by former Time Warner executive Tony Fernandes's company Tune Air Sdn Bhd for the symbolic sum of one ringgit on December 2nd, 2001. Fernandes proceeded to engineer a remarkable turnaround, turning a profit in 2002 and launching new routes from its hub in Kuala Lumpur International Airport at breakneck speed, undercutting former monopoly operator Malaysia Airlines with promotional fares as low as RM10.
In 2003, Air Asia opened a second hub at Senai Airport in Johor Bahru near Singapore and launched its first international flights to Thailand.
The airline currently operates a fleet of nine Boeing 737-300 and has announced plans to launch a subsidiary in Thailand and start flights to Singapore.