Singapore and Thailand are considering setting up a joint-venture airline to operate short-haul international services from the northern Thai city of Chiang Mai.
Thailand has been seeking to expand Chiang Mai into an aviation hub in the region but its leaders have expressed frustration at Thai Airways International's lack of support.
Thai prime minister Thaksin Shinawatra raised the idea of a joint-venture airline with Singapore prime minister Goh Chok Tong last week.
Thaksin said a "budget airline" is under consideration to promote tourism in the so-called Mekong basin.
Goh said Singapore Airlines (SIA) would examine the proposal for a joint venture, possibly with Thai Airways. Both carriers are majority state-owned and members of the Star Alliance.
SIA could not hold a majority stake, as Thai law restricts foreign ownership in a locally registered airline to 30%.
Source: Flight International
