China Eastern Airlines on Monday announced the establishment of Jetstar, a Hong Kong-based low-cost airline, with the backing of Australian carrier Qantas.

Jetstar Hong Kong Limited, with 115 million U.S. dollars in registered capital, is an equal joint venture between China Eastern Airlines and Qantas.

The Hong Kong airline will start with three Airbus A320 aircraft and expects to add 15 more within three years, China Eastern said.

The move marks the first time for China Eastern to enter the budget airline market, the company said, adding that it has seen great potential in the Hong Kong market.

Jetstar Hong Kong will combine Qantas's experience in operating low-cost flights and China Eastern's rich passenger resources and flight network, the company said.