Garuda entered into a partnership with Singapore-based firm Gallant Venture, which will invest Sg$300 million ($237 million) into the project.

The two firms signed an agreement at the Singapore Airshow to jointly develop Bintan as Garuda's new hub with a dedicated airport for the carrier and its subsidiary as well as a centre for aircraft maintenance.

Garuda will also promote Bintan, an island with white-sand beaches and resorts less than an hour by boat from Singapore, as a tourism destination.

"Currently the airport is under construction, they have started with a runway that is 3,000 metres (10,000 feet) that is quite long and can land wide-body (aircraft)," Emirsyah Satar, CEO of Garuda Indonesia, told a media briefing.

"This new operation out of Bintan will help strengthen Garuda's network development, with a potential to connect East Indonesia with West Indonesia and become the meeting point for our international flights to Europe and the Far East," Satar added.

"With our regional fleet stationed in Bintan, Garuda will be able to be more competitive to service the second tier tourist and business destination cities within ASEAN."

The airport is scheduled to start operating in the first quarter of 2016.

Indonesian carriers are setting up aviation hubs across the vast archipelago because of congestion at the main airport in Jakarta.

Bintan will be Garuda's fifth hub in Indonesia after Jakarta, Makasar in Sulawesi, Denpasar in Bali and Medan in Sumatra.

The Bintan aviation hub will include a 177-hectare (438-acre) aerospace industrial park housing a maintenance, repair and overhaul facility.

The park will also have a facility to manufacture and assemble aircraft engines and components and an aviation academy.