Queensland Premier Anna Bligh said in Friday that she will lobby with Qantas Chief Executive Alan Joyce not to shed 500 aircraft engineering and catering jobs in the flag carrier. She made the statement a day after Mr Joyce announced a review that would lead to the axing of jobs after Qantas posted an 83 per cent decline in profit due to the labor dispute and fleet grounding.

In pushing for the retention of the jobs, Ms Bligh told Mr Joyce that she does not want to see the jobs move to other states or overseas.

"I've left him under no doubt. It would make no sense for Qantas t remove job from their newest and best equipped maintenance facility in Australia," Ms Bligh told ABC.

Mr Joyce said because of the retirement of some jets and reduction of routes, the air carrier no longer needs to operate three heavy maintenance facilities in Brisbane, Melbourne and Avalon. The Brisbane facility has 600 employees. He said Qantas need to cut costs due to higher aviation fuel.

"It's a huge investment in state-of-the-art equipment and some of the best trained people in Australia.... I'm not going to let those jobs leave Queensland. We'll be fighting tooth and nail to keep them here," the premier said.

However, Mr Joyce did not provide a geographical breakdown of where the 500 jobs would be shed, fueling speculations in Brisbane that 100 maintenance workers may become jobless by Monday.

Queensland's aviation sector is definitely suffering from turbulence. Aside from the threat of job losses made by Qantas, budget air carrier Air Australia was placed into administration on Friday, stranding thousands of Australian passengers.

Initial estimates place the number of affected Air Australia passengers at 4,000 domestic and international travelers including Australians in Phuket, Thailand and Hawaii. Some of them rebooked their flights with Qantas and Jetstar.

Although aviation observers were not surprised with the fall of Air Australia, which until Thursday was still selling tickets, the development would result in another 300 airline jobs lost. They said what happened to Air Australia has precedents, citing the collapse of Ansett, Compass I and II, Impulse, OzJet, Kendall and Hazelton, SkyAirWorld and MacAir.

Air Australia was relaunched in September as a commercial carrier to Asian vacation destinations such as Bali and Phuket after it lost in 2010 a $30-million contract with the Defence Department to fly Australian troops to the Middle East.

The warning sign were there for Air Australia, formerly named Strategic, when its chief executive, Michael James, was left in 2011 as the only shareholder after his partner, Melbourne businessman Shaun Aisen, cut ties. The observers said the relaunched air carrier was bound to fail in a highly capital-intensive industry against larger budget airlines such as Jetstar and Virgin Australia.

Daniel Gschwind, head of the Queensland Tourism Industry Council, even downplayed the impact of Air Australia's closure on the state's tourism industry. He said the failed company is a relatively small supplier, although he acknowledged that an airline closure is never a good thing for Queensland business or the sector's reputation.

"We'll survive - we have very viable, very strong airlines which have created a very consumer-friendly aviation market for Australia so that's unfortunately the price of that very competition that we pay sometimes," Mr Gschwind told AAP.

"A very highly competitive aviation sector occasionally produces victims, and Air Australia is one of those victims at the moment," he added.

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