Indonesia’s largest privately owned airline, Lion Air, will establish an affiliate carrier in Malaysia in partnership with local company National Aerospace & Defence Industries (NADI).

The Indonesian carrier’s president director, Rusdi Kirana, says a joint-venture framework agreement has been signed with NADI to establish a new Kuala Lumpur-based airline, which will be branded Malindo Airways.

Lion Air will own 49% of the new carrier and NADI 51%, in line with Malaysia’s foreign ownership laws, Rusdi says.

The new venture, as previously reported by Aviation Week Sept. 11, will apply for a Malaysian air operator certificate (AOC) and is expected to start flying within six to nine months, according to Rusdi.

Malindo, which will offer domestic and international air service, will be based at Kuala Lumpur International Airport’s (KLIA’s) new low-cost carrier terminal, KLIA Two, that is due to open in May, says Rusdi.

The airline will be positioned as a “value carrier,” rather than a pure low-cost airline, Rusdi adds. He says the new airline will, for example, permit some free check-in baggage and the aircraft will have inflight entertainment. It also will have on-board Wi-Fi, likely on a pay-per-use basis.

Rusdi says that the new airline will help reinforce KLIA’s position as an international hub and that Lion Air plans to channel some of its international traffic through KLIA.

The business plan calls for Malindo to have a fleet of 50-60 aircraft within 10 years, says Rusdi, adding that the initial fleet will consist of Boeing 737-800s and 737-900ERs.