SIA had no immediate comment on the details of the Straits Times story, which said the unit could be called Scoot Airlines.

The newspaper said the airline will start off with just one Boeing 777-200 before increasing its fleet to four aircraft within three months and 14 planes by mid-2016.

The firm is expected to serve destinations in Europe, the United States, Australia and New Zealand, it added.

Citing information from internal documents obtained by the newspaper, the Straits Times said SIA plans to charge passengers for using wi-fi services to access the Internet via laptops, tablet computers and smartphones.

It also said the airline was considering the feasibility of renting out portable devices for inflight entertainment.

"We're still in the initial set up of our operations and still working on building up the airline. As a new airline, we're expectedly exploring various arrangements, but nothing has been firmed to date," a spokeswoman for the new airline told AFP.

SIA announced in May that it will launch a wholly-owned but independently managed budget carrier using wide-bodied, double-aisle aircraft to ply medium- and long-haul routes within one year.

It is expected to compete directly with AirAsia X, the long-haul affiliate of Malaysian budget carrier AirAsia and British tycoon Richard Branson's Virgin Group.

AirAsiaX flies to several destinations including London, Taipei, Tehran, Paris, Seoul, Tokyo and a number of cities in China and India.

SIA already has a short-haul, full-service unit called SilkAir, which travels to tourist destinations in Asia and has a stake in Asian budget carrier Tiger Airways.