Air India Express, the low-cost subsidiary of India's flag carrier, will start Chennai-Kuala Lumpur flights beginning October under a new agreement to liberalise air travel between the two countries, an airline official said.

The airline is finalising details of its Malaysia entry following the signing of the agreement on July 13, reports quoting airline sources said.

The two countries agreed to free up air services between them following two days of hectic talks between aviation authorities from both sides.

Malaysia is the second international destination of Air India Express after Singapore. The carrier plans to expand flights to Trichy in the south as also other destinations in the country subsequently.

Under the agreement, both countries can designate any number of airlines to operate the India-Malaysia route. The two sides will enhance flights between Malaysia and six key Indian cities of New Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad over the next two years.

The agreement also allows designated airlines to fly to 18 secondary airports in India, as well as remove all restrictions for cargo services.

However, the agreement is silent on landing rights of Air Sahara, which was disputed by state-controlled Malaysia Airlines. Malaysia Airlines allegedly asked the government to cancel Air Sahara's licence on the grounds that passenger volumes on the New Delhi-Kuala Lumpur route were low.

While Air Sahara still has the landing rights, it is not clear when or if the carrier will start flying to Malaysia.