British Airways has given the strongest indication yet that it is considering pulling out of the London-Australia route, after Qantas favoured Emirates as an alliance partner.
In a submission to the competition regulator, British Airways said its 17-year alliance with Qantas had been a ''vital aspect'' of BA's ability to offer services between Australia and Europe.
Their alliance will end in March when Qantas plans to team up with Emirates.
''BA considers that it is increasingly challenging for an international airline to operate services on long-haul routes between the United Kingdom-Europe and Australia in the absence of such an alliance, due to persistent excess capacity and the nature of the substantial fixed costs involved in their operation,'' it said.
British Airways and Richard Branson's Virgin Atlantic are the last two major European airlines to still fly to Australia. Both offer daily services between London and Sydney.
Portions of British Airways' submission to the Australian Competition and Consumer Commission, which is deciding whether to approve a Qantas-Emirates alliance, have been blacked out.
These include the end of a sentence that details what impact ''the termination'' of the Qantas-BA alliance in favour of the proposed venture with Emirates would have on British Airways.
British Airways said it had relied on the revenue-sharing agreement with Qantas to gain better scheduling of flights and a more efficient use of aircraft time, as well as better access to the high-yielding Australian corporate travel market and better connections in Singapore, Hong Kong and Bangkok.
The airline also said in the submission that the combination of Emirates, Qantas and Jetstar would give it ''significant leverage'' on trans-Tasman routes and would minimise BA's ability to provide competing services in and out of New Zealand.
Qantas and British Airways have said before that their alliance was terminated on amicable terms. Virgin Australia has also lodged another submission in which it calls for the ACCC to conduct a ''comprehensive analysis'' to substantiate the claim that the Qantas-Emirates alliance will lower fares.
It also wants the deal to be approved for a shorter period than the 10 years that Qantas and Emirates have sought from the regulator.
Although not opposing the deal, Virgin reiterated that it believed the deal was likely to ''further entrench'' Qantas' dominant position.
As well as ending the British Airways alliance, Qantas has pulled out of code-share arrangements with Air France and Cathay Pacific, and will also be giving up landing slots in Singapore.
- The Age