The airline said the move was designed to tap into an “underserved market” of three billion people spread across the ASEAN nations, North East Asia and South Asia.
The new operation will be called AirAsia Asean and the airline was quick to point out that AirAsia Malaysia's headquarters would not be moving to Jakarta.
Tan Sri Tony Fernandes, AirAsia’s group CEO said: “We are located in a part of the world where economic growth is expected to be sustained, despite the chilly economic winds blowing through Europe and the United States.
“Shifting AirAsia's emphasis to a regional strategy is, we believe, not just good business, but also a move that will keep us ahead of the inevitable competition that is heading our way.
“No single domestic market in ASEAN, not even Indonesia, can match the potential of a regional ASEAN market of 600 million people and a combined East Asian market of 2 billion.”
AirAsia came into new ownership 10 years ago and was relaunched as Asia's first low-cost carrier.
The AirAsia group is now made up of six airlines – AirAsia Malaysia, AirAsia Thailand, AirAsia Indonesia, Philippines’ AirAsia, AirAsia Japan and AirAsia X – serving 80 destinations on 142 routes.
A statement from the group said the company was expanding at its “usual exponential rate despite the economic uncertainty gripping much of the world”.
It said Thailand, Indonesia, Philippines and Japan offered “tantalizing possibilities for the group's bottom line”.
Fernandes, who last year fell out with Malaysian Airports Holdings Berhad over an increase in passenger tax, said AirAsia Asean would serve as the “nerve centre” of its regional expansion.
He said the Jakarta base would operate in a similar way to the Ryanair office in Dublin, which serves as the strategic planning centre of Europe's largest low-cost carrier.
He added: “AirAsia Asean will help us to ensure that our voice, our concerns and our appeals are heard much more clearly in the corridors of power within ASEAN.
“Locating our regional base in Jakarta is also likely to have the beneficial effect of helping raise the profile and branding of AirAsia Indonesia, which is heading for a listing on the Jakarta Stock Exchange by the end of the year.”
The moves comes as the Indonesian market appears to be heating up with new Indonesian regional carrier Pacific Royal announcing it would launch operations this week, while private Indonesian carrier Lion Air finalised a record order for 230 aircraft from Boeing in February this year and is set to be priviatised next year.
The airline currently holds around half of the domestic market and is aiming expand its route network throughout the Asia-Pacific region.
AirAsia is undertaking the customary regulatory compliance processes with regards to the new base.