Egyptian travel group Travco, which purchased Germany's Steigenberger Hotels a month earlier, is holding negotiations with a UAE firm, regarding the launch of a new budget airline.

Osama, Chief Operating Officer of Travco, said: "It's going to be a joint venture with another UAE-based budget airline and we will soon announce its launch."

The new budget airline is the company's effort to further expand in its hospitality business.

He further said: "Both parties are working on the details and we hope to launch it later this year."

Presently, Air Arabia and FlyDubai are the two low-cost airlines in the region.

At present, low-cost air travel caters for just 5 percent of airline traffic in the region.

Travco is having hotels in Egypt and the UAE. It also manages a fleet of cruise vessels, airport ground handling and tour services.