Qantas (QAN.AU) is set to unveil plans for a joint-venture between its discount arm Jetstar and Malaysian budget carrier AirAsia (5099.KU) today in Sydney.

The JV is expected to be aimed at cutting costs through economies of scale in areas such as ground handling at airports they both service and in procurement, but the airlines expected to remain competitors and not consider cross ownership.

While the deal between two biggest discount carriers in Asia-Pacific could see cost savings of up to 10% in some areas, analysts told Dow Jones Newswires, the move is also being viewed by some as a way to ratchet up pressure on Singapore Airlines (C6L.SG)-backed Tiger Airways, which has been operating at a loss and is hoping to raise up to $250 million through an IPO early this year.

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