AirAsia and Jetstar set to announce joint venture

Singapore
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Low-cost carriers Jetstar and AirAsia are set to make a "significant" announcement tomorrow about a joint venture that would enable them to reduce costs.

"It will be a significant development for us," says a spokeswoman at Malaysia-based AirAsia, who declined to provide further details.

Qantas subsidiary Jetstar said in December, when the two carriers first began their discussions, that the joint venture would not involve equity and the two airlines will remain separate businesses.

Industry sources say that with the joint venture, the carriers are likely to increase their level of cooperation on flights across the Asia Pacific and examine ways to reduce their cost base.

AirAsia is Asia's largest low-cost carrier with associates in Thailand and Indonesia. It also has a stake in long-haul carrier AirAsia X, which flies to Perth, Melbourne and the Gold Coast in Australia.

Jetstar flies to regional and long-haul destinations out of Australia, and has associate carriers in Singapore and Vietnam.