Flag carrier Air China said it has agreed to buy 20 Airbus 320 planes as it expands its fleet size to meet growing demand.

The combined list price for the aircraft is 1.6 billion dollars, but Airbus granted "significant price concessions," Air China said in a statement to the Shanghai Stock Exchange late Wednesday. It did not say how much it would pay.

"The company is expecting to take delivery of the Airbus aircraft in stages from 2011 to 2014," the airline said.

"The transaction will strengthen the fleet capacity of the company," the carrier said.

Air China said at the Singapore Airshow earlier this month that it expected to expand its fleet to 400 planes within the next five to six years, up from 243 planes at the end of June last year.

Air China Senior Vice President He Li said the nation's airline traffic was expected to exceed 700 million passengers within 10 years and double to 1.5 billion in 20 years' time, Dow Jones Newswires reported.

China's air passenger traffic is expected to rise by 13 percent year-on-year in 2010 to 260 million passengers, while cargo volume will grow 12 percent to 4.98 million tonnes, according to official forecasts.