Qantas pilots have lost a dispute with the airline coma and its New Zealand subsidiary, Jetconnect.

Fair Work Australia dismissed a claim that Jetconnect is a fraudulent company set up only to deny proper wages and conditions to the pilots.

Richard Woodward, of the Australian and International Pilots' Association (AIPA), says Qantas is using Jetconnect to pay pilots less, and the decision has far-reaching implications for other industries.

"At the moment there's very high salaries being paid in the north-west of Australia to do normal jobs in support of mining, "he said.

"It wouldn't take a genius to figure out that you could set up a company based in Indonesia to fly people in doing those jobs."

Two out of three commissioners rejected that Jetconnect was set up to cover up the true operating arrangements between the companies.

"In our view, the operating agreements between Qantas and Jetconnect and the employment contracts entered into between Jetconnect and its pilots cannot be held to be shams," senior deputy president Alan Boulton and commissioner Peter Hampton said in the majority decision.

"Even though Qantas exercises a considerable degree and control and influence over the operation of its subsidiary, this is not sufficient to disregard the separate legal personality of the subsidiary."

AIPA was hoping a favourable decision would boost their campaign for all pilots flying Qantas planes to receive improved compensation based on Australia's laws.

AIPA is now considering an appeal and says it will intensify its lobbying for legislative reform of the Fair Work Act, to prevent other Australian companies from following Qantas' lead.

"The current ruling demonstrates the current limits of the Fair Work Act and legislative reform is now needed to enable Fair Work Australia to intervene in such cases to protect the rights of Australian workers," AIPA president Barry Jackson said.

For Qantas, group executive government and corporate affairs official Olivia Wirth said the ruling was a common sense decision and a comprehensive dismissal of the unions claims.

"New Zealanders living and working in New Zealand for a New Zealand company should be subject to New Zealand's industrial laws and agreements and not to Australia's industrial laws," Wirth said.

Qantas uses the wholly-owned New Zealand-based Jetconnect to operate Qantas brand planes on the trans-Tasman route. The subsidiary employs about 100 pilots and has been flying since 2003.