Indonesia's Sriwijaya Air expects to receive the flight permit and air operator's certificate for its planned new airline by the end of 2013.
The application to start a new carrier, to be named Nam Air, was filed some time last year.
"Now we have to decide what type of aircraft and what market segment we want to capture with the new airline," says Sriwijaya's corporate planning and business development director Jefferson Jauwena, in an interview with Flightglobal Pro.
The management is deciding on whether to acquire turboprops for Nam Air, or stick to its earlier agreement for 20 Embraer 190 regional jets. It is studying both the ATR 72 and the Bombardier Dash 8 Q400.
"If we decide to use turboprops, Nam Air will act as a feeder to Sriwijaya," says Jauwena. He adds that the new airline could also be a low-cost carrier, or serve light meals, operating out of smaller airports with runways between 1,200m (3,900ft) and 1,600m.
The carrier's agreement for 20 E-190s, with an option for a further 10 of the type, will also be dropped should it decide to acquire the turboprops.
Sriwijaya had previously said that Nam Air will start off with domestic services and may eventually ply regional routes as well.
The privately-owned carrier is also aiming to become a full-service carrier and is reconfiguring its Boeing 737-800 aircraft's cabins to include eight business class seats.