Malaysia's AirAsia and Japan's All Nippon Airways (ANA) have agreed to form a low-cost carrier based in Tokyo's Narita Airport.

The joint venture will be named AirAsia Japan, with AirAsia owning 33% voting shares and 16% non-voting shares through its wholly owned subsidiary, AA International. ANA will hold the remaining 51% stake.

AirAsia Japan will help serve the highly lucrative domestic travel market, the Malaysian carrier said in a statement.

"Air travel is deeply entrenched in the social and business life of the Japanese, even under a high cost environment," the statement said.

"Both ANA and AirAsia firmly believe that AirAsia Japan will be a success as the Japanese market possesses the necessary ingredients for growth, such as the population's strong propensity to travel, its high per capita income coupled with deep and significant internet penetration," the statement added.

The AirAsia brand is established in the Japanese market and has gained further traction since the company's long-haul low-cost operation, AirAsia X, started its services to Japan early this year, according to the statement.

Under the agreement, AirAsia and ANA have agreed not to compete against AirAsia Japan.

However, this clause does not apply to Peach Aviation, ANA's low-cost carrier subsidiary based in Osaka's Kansai International Airport. Peach is expected to start its services next year.

The agreement also states that Peach is not permitted to locate its base at Narita.

AirAsia Japan will serve the domestic Japanese market and northeast Asian countries such as South Korea, Taiwan and China.

In addition, AirAsia is planning to extend its services into southeast Asia through its existing network there.

Apart from AirAsia's Malaysian operations, the low-cost carrier also operates in Indonesia and Thailand, with a virtual hub in Singapore.

The airline has also announced plans to set up joint ventures in the Philippines and Vietnam, where services are expected to begin at the end of the year.

AirAsia Japan has applied for an air operators certificate (AOC) from the Japan Civil Aviation Bureau.

Both AirAsia and ANA have not said when they plan to begin operations.

Qantas subsidiary Jetstar operates long-haul low-cost services into Japan from Australia, while its Singapore-based carrier Jetstar Asia also plans to begin services to Tokyo.

Source: Air Transport Intelligence news