The original deal called for the purchase of 40 new aircraft with an option to buy another 40. Deliveries will start later this year and continue until 2011.

The carrier said it 'has decided to up the Airbus order following the roll-out and the success of its Indonesian operations'.

Since its launch in December, Awair had carried more than 120,000 passengers on flights from its Jakarta base to the Indonesian cities of Surabaya, Medan, Balikpapan, Bali and Padang, it said.

Chief executive Tony Fernandes said the additional aircraft were needed for AirAsia's expansion programme.

AirAsia, which flies to Macau from Bangkok and Kuala Lumpur, will launch flights between Bangkok and Xiamen for the first time next month.

It also plans to launch flights from Kuala Lumpur and Kota Kinabalu in Malaysia to Diosdado Macapagal International Airport outside Manila at the same time.

Mr Fernandes said there was room for growth. 'AirAsia is poised for more growth as we continue to develop new markets and improve on our frequencies to strengthen our existing network.'

The airline operates a fleet of 18 Boeing 737-300 aircraft, which are similar to the A320.

AirAsia's Airbus order sent a ripple through the industry, as Boeing lost yet another airline customer to its European rival.

Over the past few years, Boeing has watched its previous domination of the commercial jetliner market steadily erode as more customers switched to Airbus.

Airbus now has more than 50 per cent of the market for new aircraft orders.

AirAsia said it planned to operate a mixed fleet of the two aircraft types as the Airbus jets are delivered.

Eventually, the Boeing aircraft would be phased out, the airline said.