As confirmed by the carrier, subsidiary of Qantas Airways, Jetstar has formed a beneficial alliance with Malaysia based budget airline AirAsia, which could help both operators generate cost savings this could go up-to hundreds of millions of dollars, in addition to resulting in lower fares.

As per the terms of the joint agreement, Jetstar and AirAsia will continue to look for opportunities to together procure the next-generation of narrow-framed airplanes, work together in handling of traveler across Australia and Asia, pool components and spare parts for aircrafts and join hands in bagging engineering and maintenance related supplies and services.

Both carriers have shared that the alliance would cut costs, bring together expertise and result in much cheaper fares.

"We have identified... many hundreds of millions of dollars of cost-saving opportunities, and we think that is an exciting opportunity for us as we launch this partnership going forward'', Jetstar Chief Executive Bruce Buchanan said.

No jobs cuts are expected from either of the sides involved, and Qantas Chief Executive Alan Joyce has termed the agreement as "historic".