Airline industry experts aren't exactly sure what to think either. Investigations show that Fernandes hasn't done any of the work that goes into formally opening a new airline (getting licences, securing permits, etc etc). On the other hand, it'd be weird if he was just making up the story out of whole cloth, and it does seem like he's already secured the Bombardier airplanes that will be used by Caterham Jet. So something's happening.
Evaluating the effect that a premium airline would have on the domestic market, Malaysia's Sun Daily dryly noted that it would "add another layer of competition to the domestic airline industry, which may in turn cause the market to become more fragmented." You'll have Malaysia Airlines, the Malaysia Airlines unit Firefly, AirAsia, the AirAsia long-haul unit AirAsia X, and Caterham Jet all dividing up the domestic pie, parts of which are already eaten by foreign airlines like Qantas and Virgin Australia.
In other words, no way this works, right?