Virgin Australia admitted on Monday that its local operations have been performing beyond expectations but not to the point that could push Qantas Airways into near-extinction.

In an interview with ABC today, Virgin Australia chief executive John Borghetti declared "there is no massive capacity share grab," happening at the moment, as claimed by the national carrier, which has vehemently opposed its rival's close partnership with UAE-based Etihad Airways.

Qantas had complained to federal authorities that allowing Etihad to increase its stakes on Virgin Australia would undermine its domestic business since the Middle Eastern is flushed with cash, which is a luxury currently unavailable to the financially struggling company.

Australia's flagship airline lobbied hard for the Foreign Investment Review Board (FIRB) to keep Etihad's share holdings at its present level so as not to disrupt the present competition environment in the industry but to no avail.

Etihad chief executive James Hogan said last week that his airline got the FIRB green light for maximum 10 percent hold on Virgin shares, stressing at the same time that what Qantas had displayed in the prior week was unethical and unacceptable behaviour in the business world.

Mr Borghetti agreed.

"There's a lot of misinformation and a lot of jumping at shadows in the market and I think people should take a cold shower," the Virgin big boss told ABC.

He flatly dismissed Qantas' claims that its domestic routes were increasingly under threats from Virgin Australia, which has secured operational cooperation with Etihad and Singapore Airlines to ramp up its regional and Australian presence.

While Mr Borghetti admitted that all business aims laid out by Virgin have been so far achieved since 2010, its domestic shares still hover at around 31 per cent, leaving much of the market to Qantas and making it the clear leader in all terms.

The Herald Sun said Qantas enjoys roughly 65 percent of the Australian commercial airline market.

And the most that Virgin did was not to topple Qantas from its throne but to encourage fare price wars that eventually led to the reduction of airline ticket price by up to 25 per cent, especially in the business class, Mr Borghetti said.

"We deliberately entered that market and we know that the fares were very high and we could bring competition at lower fares with better service and that's exactly what we have done," he explained.

He conceded, however, that Virgin's strategy of attracting business partner has been paying off handsomely, disclosing that "we've just entered the third year and we've almost achieved all of them."

Since entering into partnerships, Virgin's domestic business "almost trebled, so it's been a very beneficial relationship, as have the other relationships we have," Mr Borghetti said.

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