Australia and Japan have signed an open skies aviation agreement that will allow Australian carriers fly into smaller Japanese airports, just as flag carrier Qantas looks to set up a low-cost airline partnership in Japan.

The deal allows unlimited flights between the two countries, including to Tokyo's Haneda airport, and lifts capacity restrictions at Tokyo's larger Narita Airport from 2013, Australia's Transport Minister Anthony Albanese said on Friday.

"It also makes it possible for Australian airlines to fly beyond Japan to third countries for the first time, including key markets such as China and Europe," Albanese said.

Qantas, Japan Airlines and Mitsubishi have announced plans to launch a new domestic airline -- Jetstar Japan -- as part of the Australia's carrier's wide-ranging overhaul to improve profitability.

More than one million people fly between Australia and Japan each year and passenger numbers are forecast to grow by 25 percent by 2020, Albanese said.

Japan signed an open skies accord with the United States in October last year as part of a government push to liberalize aviation markets, with Haneda unveiling a new international terminal to help meet demand.

Australia's Jetstar, a low-cost Qantas subsidiary, was the first no-frills carrier to begin services in Japan, flying into Kansai International Airport in 2008.

Jetstar Japan, in which Qantas, JAL and Mitsubishi would each hold one-third share, will launch with an initial fleet of three new Airbus A320 aircraft.