Tiger Airways and Jetstar Asia have been granted the rights to operate flights from Singapore to Kuala Lumpur from February onwards.
The two budget carriers will each operate one daily flight on the Singapore-Kuala Lumpur route, the ministry of transport said in a brief statement.
Allowing the two Singapore-based budget carriers to operate the highly lucrative route is part of plans by the city-state and Malaysia to open up the sector to competition.
The two countries recently agreed budget carriers would be allowed to run four daily flights on the Singapore-Kuala Lumpur sector starting February 1, 2008.
AirAsia chief executive Tony Fernandes promised fares at about 150 Malaysian ringgit (A$51) for a one-way ticket including taxes.
Malaysian, AirAsia, has been lobbying rights to this route, which has been dominated by Malaysian Airline System (MAS) and Singapore Airlines (SIA) for 35 years. AirAsia would be allowed to operate two flights on the route.
Tiger Airways is 49%-owned by SIA, while Jetstar Asia is 49%-owned by Qantas Airways.
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