Indonesia-based budget airline AWAir has dropped plans for flights between Indonesia and Singapore after failing to secure landing rights from the wealthy city-state.

AWAir, a unit of Malaysia's AirAsia, was last month forced to cancel its maiden flight to Singapore when the Civil Aviation Authority of Singapore (CAAS) rejected its application for landing rights.

The regulator said the airline had failed to file proper documents.

In a statement on Friday, AWAir said it would shelve plans for the route, having waited more than two weeks after it filed the additional documents requested by the regulator.

The cancellation comes nearly two months after its first application to CAAS on December 15.

"We are very disappointed and puzzled over the lack of response from the CAAS," Sendjaja Widjaja, AWAir's President Director said in a statement, adding that there was no indication of a resolution.

Passengers who had made bookings for the route could obtain a refund from the airline, he said.

A CAAS spokeswoman had no immediate comment.

Singapore, Asia's sixth-biggest air hub, is seeking a slice of the fast-growing low-cost carrier market in the region and is constructing a new terminal dedicated to budget airlines to position itself as Southeast Asia's hub for short-haul flights.

Singapore budget carrier Valuair also cancelled its maiden fight to Jakarta last year after Indonesian authorities denied it landing rights, forcing the airline to transfer passengers to another carrier.

The Singapore government, which controls flag carrier Singapore Airlines, also has equity in two budget airlines. Its state investment agency, Temasek Holdings, holds 19 percent of Qantas Airways' JetStar Asia and 11 percent of Tiger Airways, set up with the founder of Irish discount carrier Ryanair.