SYDNEY (REUTERS) - Qantas Airways said on Thursday (June 4) it would boost domestic capacity to 15 per cent of pre-pandemic levels by the end of June, up from 5 per cent now, as Australian states ease travel restrictions.

The airline said more flights are likely in July depending on travel demand and further relaxation of state borders, with the ability to increase to up to 40 per cent of pre-crisis capacity by the end of July.

"We know there is a lot of pent up demand for air travel and we are already seeing a big increase in customers booking and planning flights in the weeks and months ahead," Qantas chief executive Alan Joyce said in a statement.

The initial increase equates to more than 300 return flights a week.

Australia's most populous state, New South Wales, allowed residents to travel for leisure within the state from June 1. Qantas and low-cost arm Jetstar are adding flights from Sydney to Ballina, near the popular tourist destination of Byron Bay in the state's north.

But Queensland, a favoured destination in the southern hemisphere winter due to its warmer weather, has so far kept it state borders closed.

Joyce said Qantas could ramp up flying quickly in time for the July school holidays if border restrictions eased.

"Normally, we plan our capacity months in advance, but in the current climate we need to be flexible to respond to changing restrictions and demand levels," he said.