The two largest low cost carriers of Asia Pacific namely Qantas Airways Ltd.'s Jetstar unit and AirAsia Bhd have joined hands for offering affordable air services. The co-operation, a challenge to rivals Singapore Airlines and Tiger Airways, is aimed to collaborate for purchasing aircrafts and offering ground handling services.

AirAsia Chief Executive Officer Tony Fernandes said that the move may yield cost savings of as much as A$200 million. The Sepang, Malaysia-based carrier, alone is expected to save around $29 million as a result of the co-operation. The move, at the same time, would prove beneficial for budget-conscious travelers of the highly potential Asian air-travel market.

Ben Potter, a research analyst at IG Markets in Melbourne, said, "Any ways to further reduce costs and offer more competitive fares will benefit both shareholders and customers. The Asia-Pacific region is one of the biggest growth markets in aviation."

Meanwhile, the stocks of Qantas, the largest airline of Australia, fell 0.3 percent to A$2.95 while stocks of Air Asia declined 0.7 percent to 1.42 ringgit in the markets of Sydney and Kuala Lumpur, respectively.