The combined 57 million US dollar investment for the facilities by the two neighbours is a boost for the region's budget airlines which have blossomed despite initial scepticism at the no-frills concept, they said.

"Low-cost terminals are a natural extension of the budget phenomenon we've seen in the past 18 to 24 months," said Shukor Yusof, an aviation analyst with Standard and Poors in Singapore.

Malaysia on Thursday opened Southeast Asia's first dedicated no-frills terminal built at a cost of 29.2 million dollars. It can handle 10 million passengers a year.

Next door in Singapore, a 27.8 million dollar facility starting operations on Sunday can handle 2.7 million passengers annually and is designed to serve five million after future expansion.

"Low-cost carriers are here to stay and will be a significant part of the regional aviation industry," Yusof said.

"The development of two dedicated terminals also illustrates low-cost carriers' growing presence in the airline sector, having transformed it via low fares and emerging route networks."

The two terminals each have only one committed user, AirAsia for the Malaysian facility and Tiger Airways in Singapore. This has not dented analysts' upbeat outlook for the regional budget airline sector.

"I don't think it is much of a concern," said John Koldowski, director of the strategic intelligence centre at the Bangkok-based Pacific Asia Travel Association.

"The low-cost carriers when they first came out, many said it was a fad... well, it has lasted and in fact it has consolidated.

"They certainly stimulated the sector and markets and consumers obviously like what they are receiving."

Growth in the low-cost sector partly explains why industry watchers expect the Asia-Pacific region to lead global growth in air passenger traffic over the next 20 years.

While Malaysia and Singapore are fierce economic rivals and both aim to be the hub for low-cost airlines, analysts said the two terminals will only spur growth in the sector.

"I don't think the proximity of the terminals has too much bearing, especially with low-cost flights between the two countries not currently allowed," said Richard Pinkham, a Singapore-based consultant with the Centre for Asia Pacific Aviation in Sydney.

"As both carriers are principally point-to-point travel at this point, it seems not overly likely that the two low-cost terminals will be in competition with one another for passengers, especially with a five-six hour drive separating them," Pinkham said.