The in-principle agreement was reached during a video-conference on Wednesday between Hong Kong's Secretary for Commerce and Economic Development Edward Yau, and Singapore's Transport Minister Ong Ye Kung, reports Xinhua news agency.
According to the agreement, there are no restrictions on travel purpose, and travellers under the ATB will not be subject to any quarantine or Stay-Home Notice requirements, or a controlled itinerary.
But they will need to have negative results of the mutually recognized Covid-19 polymerase chain reaction tests.
However, travellers will be required to take dedicated flights with no transit passengers or non-ATB passengers on board.
The ATB can be scaled by adjusting the number of dedicated flights upwards or downwards, or even suspended, in line with the latest developments and Covid-19 situation in both places, according to the agreement.
"I am pleased that both sides have agreed on the key features to underpin the expeditious conclusion of the ATB between two major international aviation hubs in the world," Yau said.
"This is a milestone in our efforts to resume normalcy while fighting against the long-drawn battle of Covid-19.
"I have every confidence that the ATB arrangement can come to fruition very soon to facilitate resumption of air travel between our two economies," Yau noted.
"Both our cities have low incidence of Covid-19 cases and have put in place robust mechanisms to manage and control Covid-19," Ong said.
"This has given us the confidence to mutually and progressively open our borders to each other."
Ong said the ATB is a safe, careful but significant step forward to revive air travel, and provide a model for future collaboration with other parts of the world.
The two sides are expected to work out the details of the ATB in the coming weeks before launching it.