The board of directors of Thai Airways International Plc (THAI) have agreed in principle to co-invest with Tiger Airways Holdings Limited to set up an ultra-low cost, low fare airline, executive director of the Legal Department at THAI Niruth Maneepan said on Monday.

The new low-cost  Thai Tiger Airline will have an initial registered capital of 200 million baht. THAI will invest 99.6 million baht, or 49.8 per cent, in the joint venture airline, while THAI’s affiliate firms will take 1.2 per cent stake and Tiger Airlines Holdings will hold the remaining 49 per cent, Mr Niruth said.

The co-investment memorandum of understanding will be signed today by THAI president Piyasvasti Amranand and Tiger Airlines Holdings CEO Tony Davis, he added.

“The establishment of  Thai Tiger Airlines is aimed at the introduction of the coming [Asean] open skies policy and to create business opportunities for the national flag carrier,” Mr Niruth said.

Mr Piyaswasti said  Thai Tiger Airlines will use Bangkok and Suvanrnabhumi international airport as its gateway to fly to other countries in Southeast Asia. The new low-cost airline plans to buy five A320 planes from Airbus next year and another 10 aircraft in 2012.

He expected  Thai Tiger Airlines would start offering services in the first quarter of 2011.