Singapore Airlines is to mount a challenge to fast-growing Air Asia X by creating its own budget long haul carrier.
The start up called Scoot plans to launch with services to four or more cities in Australia and China by next summer.
A fleet of 14 aircraft is planned by 2016, starting with four Boeing 777s in 2012.
Chief executive Campbell Wilson said Scoot would undercut full service airlines by 40%.
Scoot’s business strategy is to focus on destinations that are five to 10 hours from Singapore.
SIA has invested $227 million in the offshoot. It already operates short haul low-cost carrier SilkAir in Asia and is also a majority shareholder in budget airline Tiger Airways.
“Adhering to the low-frills spirit that has proven so popular in short haul arenas in Asia and around the world, Scoot will offer great value airfares up to 40% less than legacy carriers,” the company said.
Air Asia X is the long haul arm of Malaysian low cost carrier Air Asia.