Vietnamese budget carrier VietJet Air said yesterday it had signed a $3.04 billion deal with U.S. engine maker Pratt & Whitney, underscoring the growth potential of Southeast Asia's low-cost airline market.

The engines will power the 63 Airbus A320neo and A321neo aircraft ordered by the carrier, VietJet said in a statement at the Singapore Airshow. The agreement is worth $3.04 billion, VietJet said. Industry players have said that Southeast Asia, including Vietnam, is a key growth market for budget air travel, driven by the region's growing middle class, many of whom are travelling for the first time. Founded in 2007, VietJet says it currently has a fleet of 34 aircraft, including A320s and A321s, and operates 200 flights each day.

Apart from domestic services, it also flies to international destinations like Thailand, Singapore, South Korea, Taiwan, China and Myanmar. US aircraft maker Boeing is forecasting that Southeast Asia needs 3,750 new airplanes in the next 20 years, with more than three-quarters of the deliveries being single-aisle airplanes favoured by budget carriers.