QANTAS has radically overhauled its international network in a landmark alliance with one of its fiercest rivals, Middle Eastern airline Emirates.
Under the new deal, Qantas will switch its two daily Australia-London flights - known as the kangaroo route - from a stopover at a base in Singapore to one flight through a new hub in Dubai to Heathrow Airport.
It will mean Qantas's 8.6 million frequent flyer members will be able to ''earn and burn'' points on Emirates flights to more than 70 destinations in Europe, the Middle East and Africa.
The airline is still working on the details of the alignment of the two loyalty programs, and is yet to decide whether status credits on the loyalty schemes will be included.
The agreement is aimed at stemming multimillion-dollar losses on routes to Europe by further reducing the global reach of Qantas planes and sending its passengers overseas on Emirates flights.
After a record annual loss last month, Qantas will ditch its 747 jumbo services between Singapore and Frankfurt - its last remaining destination in continental Europe.
The agreement with Emirates includes co-ordination on pricing, sales and flight schedules, and will need approval from the Australian Competition and Consumer Commission.
The Qantas chief executive, Alan Joyce, said the deal was a ''step change'' for the airline, and would help to return its international operations to profitability within the next three years.
''This is the biggest deal Qantas is ever going to do,'' Mr Joyce said.
''Together with Emirates, Qantas will provide a unique one-stop hub service, as well as deeply integrated frequent flyer and customer benefits.''
But the alliance with Emirates will end Qantas's 17-year relationship with British Airways on the kangaroo route to London, as well as code-share agreements with Cathay Pacific and Air France.
''Over the past 17 years, the joint business with British Airways has been central to the Qantas network,'' Mr Joyce said. ''However, global operating conditions have changed and partnership with Emirates is the right strategy for Qantas.''
The pilots union, which has been at loggerheads with management, reacted positively but was concerned the ditching of flights to Frankfurt could lead to the early retirement of 747 planes and threaten jobs.
''We would be concerned if this venture resulted in a loss of jobs,'' the vice-president of the Australian and International Pilots Association, Richard Woodward, said.
''We would hate to see Qantas become a regional feeder for Emirates in the longer term.''
A CBA Equities analyst, Matt Crowe, said it represented a shift in Qantas away from London and would better align services with where its customers wanted to fly.