Air Asia X is threatening to move UK services to continental Europe because of government taxes on air fares.
The chief executive of the Malaysian low-cost airline, Azran Osman-Rani, said he had been forced to consider reducing the number of services between Stansted and Kuala Lumpur because of politicians' stubborn stance on air passenger duty (APD).
"We are disappointed with the Conservative-lead government," he told ABTN.
"It said it would look at APD and try and reward the most efficient operations and aircraft, rather than the per passenger levy.
"But the issue seems to have slipped off the radar screen, and so we will have to make our choices accordingly."
Osman-Rani said Air Asia X - which launched its UK service in the first quarter of last year - had not been involved in any dialogue with the government or any pressure group regarding the APD issue.
He said the airline was too small a player to influence Whitehall mandarins when compared to the "big boys who fly into the UK dozens of times each day".
"We will vote with our feet rather than try and effect change," he said.
"I don't think we'll pull out completely, but we may redeploy more capacity to a continental destination. That's already happening today. The number of people arriving in my part of the world via a European transit point having originated in the UK is quickly growing."
Air Asia X currently flies daily from Stansted to Kuala Lumpur, but had increased services to nine-per-week during the summer months.
"Load factors have been about 80%, which is where we want to be. Our model is still built around the leisure and student traveller, though some 20% of our passengers travel on business."
When the route was launched last year the airline leased an A340-300 aircraft from Air Canada to operate the service.
But Osman-Rani quickly realised that for the service to be profitable the cabin would have to be reconfigured.
The number of business class seats was reduced from 30 to eight - though these are all flat beds - to make more room for economy seats.
The Malaysian said the majority of bookings were still made on the airline's website, and suggested that his decision to work with the global distribution systems (GDSs) had not worked out as planned.
"I think the GDS has been overrated for us. There was a lot of talk about it giving access to a segment that wouldn't buy online, but we haven't seen that.
"And I have not heard anything proactive from the GDSs in terms of what it would take to increase sales through the channel.
"They chased us hard until we connected in and then it went quiet. We will still give it time, but it's simply not been a success for us."
Osman-Rani said he did not believe the airline was missing out too much, claiming a number of senior executives from the Far East were booking direct anyway.
In terms of the economy, Osman-Rani said the airline - which is nearing two full years in operation - had come through the challenging financial climate in robust shape and was ready to grow.
"We are doing much better than last year, we've seen the worst of the crisis. We're still pushing to get more routes to fly and opening up in new markets."
He said the airline's key routes should have matured enough by next year that they would be able to carry investment in new routes.
He added that the company would be focused on growing into new markets in 2011, though consolidation and airline alliances were not part of the strategy.
"People who presume consolidation are those who running out of options. We don't believe in consolidation. The moment you try to merge airlines with different operations, crew, fleets and cross border issues you get sucked out into the detail and you miss out on capturing external growth. We don't see any benefit.
"We don't need an integrated code sharing agreement, maybe some do, but most customers are only interested in cheap tickets and don't mind booking online for that."
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