Japan Airlines, Qantas and Mitsubishi are to launch a new budget airline in Japan, the companies announced August 16.

The latest in a string of new low-cost carriers which are transforming Japanese and Asian aviation, Jetstar Japan will take off towards the end of 2012, initially focusing on domestic services.

With routes between Tokyo Narita and Osaka Kansai and other potential destinations expected to include Sapporo, Fukuoka, and Okinawa, the airline could present yet another challenge to Japan's high-speed rail network.

All Nippon, Japan's other major airline, announced an agreement for a new airline with low cost Malaysia-based carrier AirAsia last month.

Jetstar Japan is likely to be based on the Australian Jetstar, a low-cost carrier operated by Qantas, which flies both domestic and mid-haul routes (including Australia to Japan) and launched seven years ago.

It will begin services using three Airbus A320 aircraft with just one cabin class, although officials expect the fleet to grow to 24 aircraft within the first few years.

Ultimately, Jetstar Japan will also serve other key Asian cities as short-haul international destinations, a statement said.

The announcement means that by the end of next year, there will be three low-cost airlines available for travelers in Japan - Jetstar Japan, the All Nippon/AirAsia collaboration and Peach, another low-cost carrier founded by All Nippon which is expected to take off in March 2012.