Qantas Airways is currently in discussions with Dubai-based Emirates, according to reports, which could soon allow Australia's flag carrier to set up a hub in the key Middle East city to be used as springboard for its European flights.

The Australian Financial Review (AFR) reported on Thursday that negotiations between Qantas and Emirates for a possible alliance on international flights were underway though both firms have remained quiet on the matter.

The same report hinted that should both airlines reach a definitive agreement, Qantas would begin flying to Dubai where its passengers would be transferred to Emirate planes en route to their European destinations.

The imminent deal could end Qantas' present roundabout service flights on their way to Europe, which presently were being routed via Singapore then to London before passengers could proceed to their end destinations in the European continent.

It is likely, AFR said, that Qantas will dismantle much of its operations in Frankfurt and London in the immediate aftermath of a partnership with Emirates, which reportedly bent on forging code sharing or global revenue arrangements with the premier Australian airline.

Reuters reported too that part of the ongoing talks between the two carriers is the likely ramping up of Qantas presence in Middle Eastern and African routes, which presumably would shore up its struggling international operations.

Should the talks produce positive results, Qantas will add up the new alliance with its existing agreement with American Airlines, which receives and facilitates the national carrier's U.S. routes from its American base in Dallas, Texas, the AFR report said.

The deal could also prod Qantas to end its agreements with British Airways and Cathay Pacific, which respectively process Qantas' European flights via Thailand and Hong Kong, according to The Herald Sun.

The news came out as Prime Minister Julia Gillard said on Thursday that amidst the business arrangements that Qantas will seek and finalise with other airlines, it will remain majority-owned by Australian entities and operators.

"Qantas is the subject of special arrangements because of its significance to us as a nation so it's always going to be majority Australian owned," Ms Gillard told ABC today.

The way Qantas operates and the nature of its ownership, she added, is based on special legislation passed by the Australian Parliament.

The prime minister also refused to discuss reports that Qantas has been seeking possible business pact with Emirates following its short-lived code sharing deal with another Middle Eastern carrier, Etihad.

"For Qantas, commercial arrangements it makes are a matter for it," Ms Gillard was quoted by The Wall Street Journal as saying when asked about the report.