Etihad Airways said on Friday that securing substantial holdings in Virgin Australia seeks "to create better economies of scale," for its international operations and not to control the management nor undermine a competitor's business.

Etihad chief executive James Hogan told The Australian on Friday that Qantas Airways got it completely wrong when it declared that the UAE-based airline was out to eat up considerable pie of Qantas' domestic market, currently the national carrier's only source of profits.

Qantas has seen flagging revenues on its international operations, hinting recently that its underlying profit will again decline following losses of $450 million it incurred in the past financial year.

Earlier in the month, Qantas officials informed the federal government of likely threats to its local operations, which the company claimed were most posed by Etihad and Singapore Airlines - two carriers with exiting coding share agreements with Virgin Australia.

But the manner that Qantas painted Etihad's business approach left a bad taste in the mouth, according to Mr Hogan, who is also an Australian national tasked by the state-owned Etihad to grow the Middle Eastern airline.

"It is a great shame the business (Qantas) has used this as a tactic. The UAE has a great relationship with Australia in trade, defence and in a whole range of areas," the Etihad chief told News Ltd publication.

"As a very proud Australian, I know that this is not representative of the market or the country or the people," he added.

Lamentably, Mr Hogan said that he can only presume that Qantas was forced to employ questionable tactics in competing with rivals in order to smoke-screen its internal business failures.

But he stressed that Qantas resort was wholly unbelievable in some respects.

"In other markets, we have not seen these sorts of reactions from national carriers. To see it being used to mask their own real issues is disappointing," Mr Hogan explained.

Etihad's view on the matter was made known following the decision of the Foreign Investment Review Board (FIRB) to allow efforts by Etihad to increase its stakes on Virgin from 4.9 percent to 10 percent.

The nod was given with the regulator convinced that Etihad's targeted share mark in the Richard Branson-owned firm was too remote in making inroads for majority stakes in the airline, currently Qantas' major rival in Australia.

But Qantas, Mr Hogan said, was jumping the gun on Etihad, which he added was not only unnecessary but also ridiculous.

"What we won't do is get into a position where it means we take control of the business," he assured.

In fact, "we can't run an Australian airline from Abu Dhabi, nor do we intend to," Mr Hogan added.

The major aim for Etihad is to increase its international network and improve on its route cooperation with willing partners, he added.

Qantas has urged the government to review its charter so it can fairly compete in the industry that it claimed has been increasingly dominated by players with solid financial backings.

Though it was privatised 17 years ago, existing caps on foreign ownership of Qantas shares serve as barriers for the airline to attract additional investments, which the company said places it in a disadvantaged position against competitors.