Frequent riders of budget airliners flying short-haul routes in Asia have another airline alternative to use as Australia's Qantas Airways Ltd. and China Eastern Airlines Corp. announced the establishment of a joint venture (JV) that will give birth to a Hong Kong-based budget airline craft.

The new low-cost airline player, dubbed Jetstar Hong Kong, will go online mid 2013 initially with three Airbus A320 planes and gradually increasing to 18 units by 2015, the two companies said in a joint statement on Monday.

The JV, which will entail a capitalization expense of $198 million, will cover short-haul routes in Asia, including Greater China, Japan, South Korea and Southeast Asia.

"We see tremendous potential for the Qantas Group in Asia and we are looking forward to working more closely with China Eastern Airlines to deliver on it," Alan Joyce, Qantas' chief executive officer said in a statement.

"We believe there are huge opportunities for the Jetstar low fares model throughout Asia, including Greater China, and are excited to be the first major Chinese carrier to bring this travel option to the region," Liu Shaoyong, Chairman of China Eastern Airlines, likewise said.

This airline JV between Australia and China came after talks between Qantas Airways Ltd. and Malaysian Airline System Bhd. collapsed earlier this month, which could have established yet another premium airline carrier.

"I don't think this is a replacement for a premium carrier," Sydney-based analyst David Fraser said in Bloomberg News. "This will be a low-cost joint venture and I don't think it's going to endanger the path to a full-service airline."

Qantas Airways Ltd. had long been planning to expand its business to cover and refocus on Asia, the world's fast-growing aviation market.

"This is a unique opportunity to capitalise on the enormous potential of the Greater China market, where the penetration of low cost carriers is less than five percent," Bruce Buchanan, Jetstar's Chief Executive, said in a statement.

"Jetstar's fares will be 50 per cent less than existing full service carriers, which we've seen create new travel demand in our markets across Asia because it enables people to make more trips, more often."

Hong Kong, one of the major travel hubs in the Asia Pacific region, has around 40 million passengers a year, Buchanan said, while Greater China has a travel market of 300 million passengers per annum. They see these figures increasing to 450 million by 2015.