QANTAS has signed off on the largest aircraft order in Australia's aviation history, paying $9 billion for 110 Airbus 320s in a contract that paves the way for its dual-airline Asian push.

Qantas chief executive Alan Joyce said the Airplanes would be used for the carrier's "new, premium airline based in Asia and will support Jetstar's enlargement plans as well as the establishment of Jetstar Japan".

The first 11 aircraft will be fitted out for the new premium carrier, while the remaining together with 78 of the fuel efficient A320 Neo models will be distributed amongst Jetstar's Asian and Australian operations.



Mr Joyce said the new airplane would give the Qantas group more flexibleness.

The Airbus contract came as International Air Transport Association figures bring out airline traffic fell 1.5 per cent between June and July.

Association chief Tony Tyler said the industry has change over gears downward.

Mr. Joyce said it was early to say that the airline market was contracting, but Airbus officials said there were signs that the market in Europe, which recovered powerfully, last year, was flat.

Qantas said profits from domestic passengers for July and August was 7.6 per cent above 2010 figures, whereas international yields, including Jetstar were up 5.6 per cent.

But Commonwealth Bank analysts said yesterday the yields could be force in coming months amid "soft economic situation".

The analysis said extra costs owing to industrial act and weaker yields would see a delay in return to gainfulness at Qantas international, which lost $200 million last year.

The CBA analysts have scaled back their forecasts for cost savings at Qantas from $85 million to $25 million this year, approximation that the roll-out of the new Qantas Asian operations will help produce extra savings in 2012-13.

Airbus is highly optimistic on the long term aviation future in the Pacific region; figure that carriers will need 736 new passenger and freighter aircraft worth $102 billion up to 2030.