Qantas subsidiary Jetstar and Air Asia, a Malaysian low-cost airline, announced 'world's first' low-cost alliance in January, 2010. Now, Thai Airways and Singapore-based Tiger Air will join forces to create a new low-cost airline, Thai Tiger.

The Jetstar-AirAsia alliance announced in January was meant to reduce operating costs and included a possible agreement to purchase aircraft jointly, making larger aircraft investments more economical for the two companies. More than a marketing alliance, the airline union has been coined "the world's first budget airline alliance" for its laser-like focus on the cost-cutting side of the business. Part of the agreement calls for both airlines to share parts and ground and passenger handling services as well.

The Thai-Singapore joint venture, to be called Thai Tiger Airways, will be 51 percent owned by Thai Airways and another Thai entity and 49 percent by Tiger. The new carrier will be based in Bangkok and is expected to start operations in the first quarter of 2011. It will offer domestic services plus international flights within a five-hour radius from the Thai capital, according to Reuters.

Parts of Asia are slowly being liberalized, adding more options and competition to the airline markets, and companies want to take advantage of a more airline-friendly future. Policies are underway to open up more of the skies in Asia. The Association of Southeast Asian Nations is expected to issue new policies regarding air transportation by 2015. The International Air Transport Association (IATA) predicts that Asia, Latin America and the Middle East will help fuel the world-wide airline recovery by generating the fastest growth in airline traffic. New, more open policies and open skies agreements will help keep the momentum going and the barriers to competition tumbling down.

During economic downturns, low-cost airlines don't do as poorly as the larger airlines. As people curtail travel plans, those that do fly typically want to fly cheaper. This small advantage is something the larger carriers would be happy to take away from their rivals. As carriers inch their way out of a multi-year recession full of losses and setbacks, they will strengthen their ability to survive and even thrive during the next downturn. This is why you are witnessing the growing airline trend of growing through alliances, joint ventures and partnerships. In doing so, larger airlines seek to deny the low-cost carriers any advantages during an economic slide by competing directly with them. The Jetstar-AirAsia cooperation is one way to do this; creating an entirely new low-cost airline from larger components is another. The airline-within-an-airline strategy has not been too successful in places like the U.S. (think Delta Song, United's Ted), but the market in Asia could provide entirely different results. And that would be a good thing for flyers seeking lower fares.