Lufthansa's Austrian Airlines said on Thursday it will invest EUR 200 million(US$228 million) to expand its Airbus fleet to compete with fast growing low-cost carriers.

Vienna Airport, one of Europe's main hubs for eastern European destinations, introduced an incentive scheme after the collapse of Air Berlin to attract new carriers, which has proved particularly successful with low cost airlines.

Budget carriers including Ryanair, easyJet, Wizz Air, IAG's Vueling and Level, and Lufthansa's Eurowings have since launched or increased services and Vienna's airport has reported a 10 percent increase in passenger numbers in the 11 months to the end of November.

Austrian Airlines plans to increase its Airbus fleet to 46 planes from 36 in the next three years, it said in a statement.

Although it will discard its 18 turboprop aircraft, the airline said its capacity will increase by more than 10 percent as the Airbus planes offer more seats.

"This can be understood as a commitment to fight in an environment of increasingly tough competition in Vienna, and we are prepared to take further steps to defend our hub," Austrian Airlines Chief Executive Alexis von Hoensbroech said.