Reflecting the country's closer links with its Eastern neighbours, a re-equipment exercise was undertaken in the 1980s, with the fleet then primarily composed of aircraft from China and the Soviet Union. For international services to Bangkok, Hanoi and Phnom Penh these included the Antonov An-24.

In 1994, the airline upgraded its fleet with ATR-42 turboprop aircraft and by 1995 had acquired an ATR-72 aircraft, adding Xian Y-7 and Harbin Y-12 aircraft to its fleet. A joint venture with China Yunnan Airlines and the Lao government was formed, which re-nationalized Lao Aviation in 2000.

In 2003, the airline was re-branded to become Lao Airlines. At the same time, the airline continued to rely heavily on ATR turboprop aircraft, which were particularly suited to Laos’s short runways and geographically challenging domestic network. The introduction and expansion of ATR 72 aircraft from 2003 onward allowed Lao Airlines to maintain regular services between Vientiane and secondary cities such as Luang Prabang, Pakse, and Savannakhet, strengthening domestic connectivity.

Throughout the mid-2000s, the airline focused on stabilising operations and gradually rebuilding its reputation, which had been affected by earlier safety concerns. As Laos opened up economically and tourism began to grow, Lao Airlines increased its regional presence, operating international routes to neighbouring countries including Thailand, Vietnam, Cambodia, and southern China.

A major milestone in the airline’s modernisation occurred in 2011 with the reintroduction of Airbus A320 aircraft into the fleet. On the 8 November 2011 it took delivery of the first of two Airbus A320 aircraft ordered from Airbus, the second A320 arriving in December 2011. The A320s are the first jet aircraft to be purchased by Lao Airlines and feature a two-class layout seating 126 passengers in the main cabin and 16 in Business Class and are powered by CFM International CFM56 engines. The Airbus A320 aircraft flew primarily on international services to Bangkok, Hanoi, Kunming, Guangzhou, Seoul and Busan.

Unlike the earlier short-term lease, this time the acquisition formed part of a long-term fleet strategy. The A320 provided Lao Airlines with a modern narrow-body jet capable of operating higher-capacity and longer-range regional routes.

At the same time, Lao Airlines continued to modernise its turboprop fleet. The introduction of the ATR 72-600 in 2012, represented a significant upgrade over earlier ATR variants, offering improved fuel efficiency, avionics, and passenger comfort.

This dual-fleet strategy—combining jets for regional international routes and turboprops for domestic and short-haul services—became a defining feature of the airline’s operational model.

The airline’s growth trajectory was not without challenges. Like many smaller national carriers, Lao Airlines faced constraints related to limited capital, infrastructure, and market size. Its fleet remained relatively small, and expansion was often incremental rather than rapid.

By the late 2010s, the airline had established a stable operational base, serving around 20 destinations across Southeast Asia and parts of East Asia, with hubs in Vientiane and Luang Prabang.