Incheon, which accommodates every carrier at its international airport, plans to set up its own airline.

The city government said on Nov. 1 that it has decided to operate a regional, low-cost carrier with Tiger Airways of Singapore.

The name of the carrier is undecided.

Tiger Airways, established in 2004, operates in more than 25 destinations in eight countries in the Asia-Pacific region.

Incheon and Tiger Airways will sign a memorandum of understanding (MOU) prior to a main contract and officially announce the establishment of a special purpose company this month. It will also apply to South Korea's Ministry of Construction and Transportation for a license to launch regular air operations by 2010.

With 20 billion won in capital, the city government, Incheon Tourism Organization and Incheon Transit Corporation will have 51 percent of the airline's shares, while Tiger Airways will have 49 percent.

The carrier will adopt five A320s or B737s, which can cover four-hour flights, to operate to cities in Japan and China.

However, it is yet to be seen whether the carrier will be able to operate international flights when the business opens, as the transportation ministry is planning to only grant international operation licenses to airlines that have operated domestic routes for a minimum of three years without any major accidents.

The government plans to revise relevant regulations by the end of this year to prevent accidents from premature carriers.

However, the city government is protesting the move that hampers new carriers' advancement into the international market.

"Asiana Airlines, for example, was permitted to fly international flights 20 months after it began domestic operations in 1988. We recognize experience is important for international operations, but what's more important is thorough preparation and management," an official of the city government's maritime, airport and distribution bureau said.

He said he expects the Incheon carrier to operate domestic routes for about a year and be allowed to start international operations.

The carrier's domestic routes are likely to include those between Incheon and Busan, Daegu and Jeju. "While other carrier's domestic flights operate at Gimpo airport, the Incheon airline will be based at the Incheon International Airport. Passengers from provinces who are leaving the country, will be able to transfer through Incheon airport," he said.

The official said its airfare will be much lower than other budget carriers - Jeju Air and Hansung Airlines, whose fares are about 70 percent of those by Korean Air and Asiana Airlines.

"The fare will cost around 40 to 50 percent of the two national flag carriers' fares, as we'll cut costs as much as possible. For example, free drinks or meals will not be provided, and flight attendants will wear white shirts and jeans instead of uniforms designed by famous designers," he said.