Australia's Jetstar Group plans to launch a Hong Kong-based budget airline focused on mainland China routes and has started discussions with the city's government to apply for an air operator's certificate, the Apple Daily reported Thursday, citing unnamed sources.

The report said Jetstar, a unit of Qantas Airways Ltd., is seeking Hong Kong permanent residents as potential majority shareholders of the proposed airline, to conform with Hong Kong laws regulating ownership of airlines registered locally.

Jetstar already operates flights within Asia through its Singapore-based unit, Jetstar Asia Airways Pte. Ltd.