To get around the ban, the budget carrier may have to offer something 'in between' - such as free refreshments, some entertainment on board and assigned seating - so that it is neither 'budget' nor 'full-cost'.

Budget airlines typically sell food on board and do not provide reading materials. Seating is usually also on a first come, first served basis.

Tiger is calling its flights between Singapore and the Indonesian capital, which it hopes will begin by the middle of the year, a 'boutique airline' service.

Details will be announced later, said a spokesman yesterday.

Tiger has also applied for approval to fly to the popular resort island of Bali.

Indonesia banned budget flights to key cities such as Jakarta in 2004, to protect its own fledgling low-cost carriers.

The only Singapore low-cost carrier to fly there now is Valuair, which started operations before the ban kicked in.

A return ticket from Singapore to Jakarta on Valuair and Indonesia's budget carrier Lion Air costs about $270. On national carriers like Garuda Indonesia and Singapore Airlines, a ticket costs some $350 to $500. The Singapore- Jakarta sector is one of the most lucrative out of Changi, second now only to Singapore-Kuala Lumpur, which received a big boost when the sector was liberalised. By December last year, there were 432 flights a week between Singapore and Kuala Lumpur, 328 between Singapore and Jakarta, and 303 between Singapore and Bangkok.

Industry watchers see the latest move as a sign of the increasing liberalisation of Asean skies.

The long-term goal for the 10-member association is for Asean-based carriers to criss-cross Asean skies without any restrictions by 2015.

Said Ms Rosalynn Tay, managing director of Tiger Airways Singapore: 'The aviation authorities in Singapore and Indonesia should be congratulated for agreeing to further liberalisation between the two countries.

'By continuing to liberalise the skies, both countries are ensuring that their tourism industries and wider economies get a significant boost from additional low-fare airline capacity - welcome news for the many people who travel between Indonesia and Singapore regularly.'

Travellers are reaping the benefits of fully open skies between Kuala Lumpur and Singapore, now that the decades-long monopoly of national carriers Singapore Airlines and Malaysia Airlines has ended.

A return fare on the 45-minute flight now costs as little as $60 on a budget carrier. Before, the same journey could cost $400 on the national carriers.

The entry of the budget players has also resulted in the national carriers cutting their fares to under $200.

But travellers said they would wait to see how much a 'boutique' flight would cost.

Said Nanyang Technological University communications studies graduate Fiana Santoso, 22, who flies to Jakarta at least once a year: 'The flight is very short, so I can do without food. If it is going to be more expensive than budget airlines, then I'd rather stick with budget airlines.'

wycin@sph.com.sg