More flights and lower fares between Australia and Malaysia may be possible in the future following the signing of a new air services agreement.

Senior officials from my Department have met with their Malaysian counterparts and signed a Memorandum of Understanding (MOU) which expands the number of seats on the routes between our two countries.

Under the MOU, Malaysian and Australian carriers will be able to operate an additional 5,000 seats per week to our major gateway airports of Sydney, Melbourne, Brisbane and Perth from March 2008, with an additional 3,500 seats to be made available from March 2009.

The previous arrangement restricted capacity to these airports to 15,000 seats per week for Malaysian carriers and 20,600 seats per week for Australian carriers.

In addition, the new one-off arrangement provides unlimited access to and from airports other than the four major gateway airports.

The MOU reflects the strong bilateral relationship between our two countries.

The new arrangement will give Australian airlines the opportunity to significantly expand their current levels of services and to compete effectively in the Asian market.

It will allow Malaysian airlines such as AirAsia X to proceed with their planned expansion into Australia, with Australian travellers expected to reap the benefits of lower fares.

AirAsia X currently operates four services per week into the Gold Coast and is looking to expand its operations to other airports including Avalon. Ultimately Australian travellers, trade and tourism will benefit from the increased competition and greater choice when travelling to Malaysia, and onto other parts of Asia and Europe.

Any new airlines wishing to take up the commercial opportunities available under the new arrangements will need to obtain relevant regulatory approvals before commencing operations, including meeting Australia's stringent aviation safety and security requirements.

The new agreement becomes effective immediately, pending formal approval of the new treaty by the respective Governments.

This new agreement with Malaysia follows last month’s historic ‘open skies’ agreement with the United States.