Budget carrier AirAsia has been given permission to fly the lucrative Singapore-Kuala Lumpur route.
Malaysian Prime Minister Abdullah Ahmad Badawi made the decision to break a monopoly held by Singapore Airlines and Malaysia Airlines.
Malaysia-based AirAsia and Singapore's Tiger Airways will now be able to operate the route, setting the stage for a price war.
From December, AirAsia and Tiger will be able to operate two daily flights each from Kuala Lumpur and Penang, and from Kota Kinabalu and Kuching on Borneo Island.