With the arrival of AirAsia, the largest budget airline in Southeast Asia by fleet size, the ongoing fare-war among low-cost carriers is expected to get even a bigger momentum.

Earlier this week, Jet Airways offered nearly two million seats at fares between Rs 2,250 and Rs 3,800 on domestic routes, prompting rival carriers GoAir and IndiGo to slash their prices. Last month, SpiceJet announced the sale of one million tickets for just Rs 2,013 apiece for one-way voyage.

The country's civil aviation regulator DGCA and the civil aviation ministry have already warned that the ongoing fare-war could hit airlines financially; but the fares are expected to fall further with the arrival of AirAsia.

Tony Fernandes, chief executive of AirAsia, said that they would offer competitive fares.

Speaking to reporters, Fernandes said, "There is huge opportunity in Indian market, which has over a billion people and not competitive enough according to me. We will offer more competitive fares to Indian consumers."

AirAsia will enter the Indian civil aviation sector through a joint venture with Tata Sons and Arun Bhatia of Telestra Tradeplace. The JV will create a new budget airline, which will be headquartered in Chennai.

AirAsia will hold the biggest (49 per cent) stake in the new budget airline; while Tata group and Arun Bhatia will own 30 per cent and 21 per cent stake, respectively.