AirAsia has bought a 30 per cent equity stake in VietJet Aviation Joint Stock Company (VietJet Air) to establish a Vietnam-based joint venture low-cost airline.

The new carrier will be branded VietJet AirAsia.

Vietnam's Ministry of Transportation approved the share acquisition on Tuesday.

VietJet AirAsia will be operating both domestic and international flights. It is currently finalising details regarding routes, frequencies and launch of flights.

The formation of VietJet AirAsia makes Vietnam AirAsia’s fourth country base, following Malaysia, Thailand and Indonesia.

AirAsia, Asia’s largest low-cost airline, joined the venture to expand its reach in Vietnam and open the country as another gateway in the ASEAN region. The joint venture strengthens AirAsia’s position as THE ASEAN airline, expanding operations in the region, increasing intra-regional connectivity, and championing the ASEAN region as a tourism hub.

“The birth of VietJet AirAsia contributes to the diversification of the aviation market in Vietnam, providing more options to meet the air travel needs of people in Vietnam and in the region,” VietJet said.

VietJet AirAsia will be tapping the expertise of both AirAsia and VietJet Air for the successful operation and marketing of low-cost flights.

“The joint venture is a well-balanced combination of the management system, technical expertise, long-term experience in the airline industry, crew and international brand of AirAsia, and the financial strength, as well as Vietnamese market insights of VietJet Air,” VietJet Air added.