The airport departure tax at all low-cost terminals by up to 50 percent from next month to boost air travel.

Transport Minister Chan Kong Choy said international passengers departing from the low-cost terminal at the Kuala Lumpur International Airport (KLIA) and in Kota Kinabalu, Sabah, would pay RM25, down from RM51.

Passengers flying domestic routes would pay RM6, down from RM9 previosuly, the transport minister was quoted as saying by Bernama news agency after the weekly cabinet meeting.

Chan said the cut in departure tax was aimed to turn Malaysia into a hub for low-cost carriers.

Neighbour Singapore is also pushing to become a hub for budget carriers.

Good news for AirAsia

Low-cost carrier AirAsia currently mounts its major domestic and regional operations out of the low cost terminal at KLIA.

Commenting on cut in departure taxes, AirAsia chief executive Tony Fernandes said it was good news for the low-cost business.

"It shows the government recognises that low-cost carriers need to operate in a low-cost environment," he said.

Fernandes described passenger demand for AirAsia as "fantastic," adding that it had flown so far 18 million passengers, up from 200,000 five years ago.

"Our plan is to build Malaysia into an aviation powerhouse in Asia," he said.