Although it had categorically denied its participation, Australia's flag carrier Qantas Airways Limited has launched its own investigation into allegations that its in-flight headphones had been manufactured and purchased from abused inmates in a prison factory in China.

The airline said it had deferred all business transactions with its supplier that had provided the headphones until after the investigations finish.

Qantas was "very concerned by these allegations," the company said in a statement.

"The allegation that our supplier of economy class headsets, which is in Vietnam, used a third party company in China to help fill an order contradicts the verbal and written assurances we've had from this supplier that their supply chain process met our standards - including the ethical treatment of workers."

"To be clear, Qantas has no relationship with the Chinese-based company at the centre of Australian Financial Review's (AFR) claims." The airline company continued to insist it performs regular audits of factories as well as suppliers to ensure its strict conditions are met.

Danny Cancian, a recently released inmate from the Dongguan prison in the southern province of China's Guangdong, revealed to AFR he and other inmates made disposable economy-class earphones for three airlines. He specifically identified them as Qantas, British Airways and Emirates.

Turbulence Ahead: Australia’s Qantas Investigate In-flight Headphones Allegedly Made By Abused Inmates in Chinese Prison Factory

Mr Cancian got imprisoned in China for figuring in a restaurant brawl and the man he kicked died. He spent four years behind bars, in a "cruel environment" where "you wake up every morning wondering if you are going to survive the day."

He said prisoners were given production quotas, and severely punished if they fail to meet targets by being 'taken outside and tasered."

To be tasered meant to be stunned by an electroshock weapon that uses electrical current to disrupt voluntary control of muscles.

He said some of the prisoners' hands had been "deformed" by producing the headphones as well as other devices, including intricate inductors, while serving inside the prison factory cell.

Qantas Vietnamese supplier, Airphonics, had indeed been named by Dongguan City Joystar Electronic Co as one of its clients. The latter said it made 300,000 sets of disposable headphones for Airphonics for Qantas in 2012.

The prisoners earn US$1.30 a month for the hard labour, according to Mr Cancian. And they all worked over 70 hours a week.

"If they want to call me a liar then they should go there and have a look," Mr Cancian said.

The headphones, he said, were placed in boxes with the company's names on them.

British Airways and Emirates likewise denied the allegations.

"Our supplier has made it abundantly clear that it has never used prisons in China to produce any BA headsets," a spokesman said.

While Emirates said it was satisfied there was "no evidence of any unethical practices in the headset manufacturing process."