Malaysian Prime Minister Abdullah Ahmad Badawi said Thursday that budget carrier AirAsia has won a battle to fly the lucrative Singapore-Kuala Lumpur route, breaking the national carriers' monopoly.

"We have made a decision, the cabinet has approved," Abdullah told reporters when asked if AirAsia had been given the green light to fly between the neighbouring capitals.

Newspaper reports said that the Malaysian cabinet had given approval Wednesday for Malaysia-based AirAsia and Singapore's Tiger Airways to operate the leg, setting the stage for a price war.

The New Straits Times said that from December or January, AirAsia can operate two daily flights each from Kuala Lumpur and Penang, and from Kota Kinabalu and Kuching on Borneo Island.

AirAsia officials said they were not immediately able to comment on the reports.

The pioneering low-cost carrier had mounted an intense campaign to break the monopoly held by Singapore Airlines and Malaysia Airlines.

Departing from Singapore, a round-trip ticket on the route, which takes less than an hour, currently costs around 450 Singapore dollars (298 US) including taxes. AirAsia is proposing one-way tickets from 60 dollars.

AirAsia's founder Tony Fernandes said this week that with Singapore indicating it wants to open the sector to competition ahead of a January 2009 deadline, Malaysia Airlines remained the only roadblock.

The Malaysia carrier has opposed an early opening of the money-spinning KL-Singapore leg, saying it needs more time to carry out a turnaround plan aimed at restoring profitability.