Qantas Airways Ltd.'s budget carrier, JetStar Airways, is reportedly tied in talks with Malaysia's AirAsia Bhd. over a possible joint venture, which is basically aimed at cost cutting as both airlines try to shrug off the effects of one of the worst recessions that the world has ever seen.

As confirmed by a JetStar spokesperson, both the carrier are "looking at ways we can further cut costs through economies of scale in areas such as ground handling and procurement".

Under the venture, the two airlines will together look at saving funds spend on the ground at airports they jointly serve, and the merger will also give the airlines, which operate almost similar plane fleets, the power to purchase more aircrafts.

Both the airlines, however, are still look at staying competitors. "We both compete for passengers from a growing pool, and that clearly will remain", said the JetStar spokesperson.

On its end, Qantas has shared that the talks are "at a preliminary stage and no binding agreements have been reached".

JetStar and AirAsia both almost exclusively operate the Airbus A320 for their short-route flights and the larger A330 for long-distance flights.