AirAsia Bhd signed a joint venture agreement with China on Sunday to establish a low cost carrier (LCC), with a base in the east-central city of Zhengzhou.
AirAsia (China) is a joint venture between AirAsia, Everbright Group and Henan Government Working Group, the airline said in a statement.
AirAsia (China) will also invest in aviation infrastructure, including a dedicated LCC terminal at Zhengzhou airport and an aviation academy to train pilots, crew and engineers, as well as maintenance, repair and overhaul (MRO) facilities to service aircraft, the statement said.
No further details of the LCC were provided.
Malaysian Prime Minister Najib Razak, who is on a visit to China, witnessed the signing of the joint venture agreement.
"This Chinese venture represents the final piece of the AirAsia puzzle," said AirAsia Group CEO Tan Sri Tony Fernandes.
"In just 16 years, we have successfully built a presence in Malaysia, Thailand, Indonesia, Philippines, India and Japan, with China closing the loop on all major territories in Asia Pacific."
AirAsia and AirAsia X currently fly to 15 destinations in China and the group is the largest foreign LCC operating into the country.
AirAsia is Asia's largest budget airline. China's Everbright Group is a state-backed financial firm.