Japan Airlines is considering the establishment of a low-cost carrier while it goes through its state-supervised restructure.
JAL may submit plans for a budget arm on Tuesday, when it fronts the Supreme Court in Tokyo.
Management at JAL have already expressed interest in a business model that will intensify competition to reduce air fares.
Sources within the company have said that an increase in the number of flight slots at Haneda and Narita airports makes the entry of another Japanese budget carrier viable.
All Nippon Airways has recently also expressed plans to establish a no-frills airline.