Malaysia and Singapore favour liberalising the aviation industry to allow budget carriers AirAsia and Tiger Airways to fly the lucrative Kuala Lumpur-Singapore route, a report said today.

Malaysia's Transport Minister Chan Kong Choy said both he and his Singapore counterpart Raymond Lim agreed that further liberlisation would be beneficial.

"We had frank exchanges on the possible liberalisation of the air routes," Chan was quoted as saying by the Star newspaper.

But Chan said both countries had yet to look into the timeline when the air routes could be fully liberalised.

"I have set up a committee to look into the pros and cons of allowing budget airlines to fly the Kuala Lumpur-Singapore route and I understand that the report will be ready in a few days," he said.

The near hour-long route is currently monopolised by national carriers Malaysia Airlines and Singapore Airlines.

Cautious stand

Officials say Singapore is pushing for liberalisation to take place soon but Kuala Lumpur was adopting a more cautious stance since there are more destinations Singapore-based carriers could fly to compared to just one in the island republic for Malaysian carriers.

Malaysia's AirAsia, Asia's largest and most profitable low cost carrier had expressed interest in flying to Singapore at a much lower fare.

Tiger Airways has the backing of Singapore Airlines, which owns 49 percent of the carrier. State-linked Singapore investment company Temasek Holdings is also a key shareholder with 11 percent.