The Australian government needs to level the playing field of the domestic aviation industry that would allow Qantas Airways to legally accept foreign investments and survive what the national carrier calls as serious threats to its existence.

Qantas executives have called on federal authorities this week to roll out solid measures that would provide more room to the company to map out growth plans and protect it business at the same time.

Qantas chief executive Alan Joyce specifically called attention to the reported deal between Virgin Australia and Etihad, the latter fully owned and operated by the Abu Dhabi government, according to the Australian Associated Press (AAP).

Mr Joyce has expressed grave concerns that Etihad is in the process of increasing its present five percent stake to the Richard Branson-owned airline, a prospect, he stressed, that would further pressure Qantas' local business operations.

With its international services already struggling amidst the existing global conditions, Qantas admitted that an alliance between Virgin Australia and Etihad, which obviously would wield more resources than Qantas would ever afford on its current state, could drive the company out of business.

"(A Virgin-Etihad alliance) will be able to flood the market with capacity until its competition is forced to significantly reduce its own operations or worse," Business Day reported Qantas as a saying in the business briefing it submitted before Canberra.

Effectively, a close partnership between Virgin and Etihad, with the latter "cross-subsidising Virgin's domestic business with the specific aim of weakening Qantas," would undercut the national carrier's domestic routes, which the company said represents its only profitable operation at the moment.

In the end, it would be a nose-dive scenario for Qantas, officials of the beleaguered airline reportedly claimed in the briefing, Business Day said.

The only way to avert such grim possibility, Qantas said, is for the federal government, through the Foreign Investment Review Board (FIRB), to intervene in the Virgin-Etihad deal that would limit the scope of the two firms' business collaboration in Australia.

Or Canberra could decide to tinker on the Qantas Sales Act of 1992, which allowed the privatisation of the national carrier but with specific caps on foreign investments, Qantas officials said.

Generous leeway in the two areas cited by Qantas would at least allow the airline to compete squarely with foreign airlines, which unlike Qantas were backed by their respective government's deep pockets, the Qantas briefing claimed.

However, National senator Barnaby Joyce appears reluctant to amend the laws governing Qantas' privatisation but he conceded that current business realities indeed threaten the company's existence.

It is imperative, Senator Joyce said, for the Australian government to scrutinise foreign states-initiated deal that could undermine the country's internal interests, which in the case of the Virgin-Etihad deal could push Qantas on brink of collapse.

"'It's not a case of being xenophobic, it's a case of recognising reality," Senator Joyce told Business Day on Friday.

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