'We will certainly look seriously into Firefly's appeal but again this is a bilateral issue, so we need to talk to Singapore,' he was quoted as saying by national Bernama news agency.

He said he would discuss the issue with his Singaporean counterpart during a regional meeting in Singapore on Thursday.

Malaysia last week allowed AirAsia, the region's biggest no-frills airline, to fly twice daily from Kuala Lumpur and Singapore, the fourth-busiest route in Asia.

Singapore Airlines' unit, Tiger Airways, is also expected to be allowed to operate the lucrative route as part of a reciprocal arrangement.

The move will end a monopoly by national flag carriers MAS and SIA, which jointly operate more than 200 flights a week between the two cities. It comes ahead of liberalisation of air travel between the two nations set for January 2009.

MAS has voiced disappointment over the early opening of the route and said it would now have to fast-track its business turnaround plan. It has called for Firefly to also be allowed to fly to Singapore from its new base in Subang airport.

Firefly was launched in April in Penang. Yesterday, it started operations at Malaysia's former main airport in Subang, which is closer to the Kuala Lumpur city centre than the new international airport.

It has also won approval to operate in Johor and Kota Kinabalu in Sabah.

Tan Sri Chan said Firefly's expanded network would allow it to serve some 150 million potential customers in the region.

ASSOCIATED PRESS