AirAsia plans to establish a new low-cost carrier in China as part of a joint venture.
The subsidiary will be run in partnership with the Everbright Group and be based in the central eastern city of Zhengzhou.
AirAsia already has operations in its home country of Malaysia, plus Thailand, Indonesia, Japan, Philippines and India.
Chief executive Tony Fernandes said: “This Chinese venture represents the final piece of the AirAsia puzzle,” adding that it “closes the loop” in the region.
AirAsia aims to invest in aviation infrastructure and set up an academy to train pilots, crew and engineers as well as running the airline.
There would also be new facilities to service and maintain aircraft in Zhengzhou, the capital of Henan province.
AirAsia already has a presence in China, flying to 15 destinations in the country, making it the country’s largest foreign budget airline, the BBC reported.
“China has been good to us and we want to give back in a big way, and this is just the start of an enduring partnership that will benefit both China and Malaysia,” said AirAsia executive chairman Kamarudin Meranun.
He added the airline had “started exploring” the prospect of eventually buying Chinese-made Comac C919 aircraft which are currently in development.