Malaysia's AirAsia and Vietnam's VietJet have signed an agreement confirming a deal to start up a new low-cost carrier in Vietnam.

AirAsia bought a 30% stake in VietJet, which will launch VietJet AirAsia to operate both domestic and international services.

Malaysian prime minister Najib Razak and Vietnam's deputy prime minister Troung Vinh Trong witnessed the signing ceremony in Hanoi, and the airlines say that their presence reflects the significance of the deal.

"Their support is instrumental in our ability to offer low fares to the Vietnamese people and the international tourists who flock to Vietnam. VietJet AirAsia will complement the existing strengths of Vietnam's tourism industry and help turn the country into a tourism powerhouse," says AirAsia CEO Tony Fernandes.

VietJet CEO Nguyen Duc Tam adds that the carrier will benefit from AirAsia's expertise in the airline industry.

"With this agreement, VietJet Air can enjoy technical expertise, experience in quality assurance, safety and security up to international standard, high quality manpower in aviation industry with a roadmap for technology transfer to VietJet Air's staff, which contributes to raising the standards of services and safety and security in the airline market in Vietnam as well as in ASEAN region," he adds.

Source: Air Transport Intelligence news