Abu Dhabi-based Etihad Airways rebuffed claims by Australia's national carrier Qantas Airways that foreign airlines are deliberately flooding the market with extra capacity, leading to floundering revenues for most of the airline firms.

However, Etihad chief executive James Hogan said on Tuesday that Qantas head Alan Joyce may be barking up the wrong tree when he declared that airlines from China and the Middle East could be posing undue form of competition to local players in the industry.

Hogan pointed out that Joyce had erred when he issued his sweeping statement that foreign airlines are merely picking out on existing markets as he pointed to the fact that Etihad has been successful too in tapping market potentials in Europe, India and the Middle East regions.

The Etihad boss wants Joyce to realise that his firm has been instrumental in opening up markets and issued an advice to his Qantas counterpart that he "should get back and fight and let the customer decide who wins," instead of pointlessly complaining "about capacity and people moving into my market."

Etihad has gained approval from ACCC for its alliance with Virgin Blue and is courting the regulator's nod anew for its fresh codesharing agreement with Air New Zealand for service flights across the Tasman route.

Hogan said that the new deal would merely facilitate for the usage of its exiting rights and take advantage of its partnership with Virgin Blue. He added that while plans are in the works for a Perth service routes, no additional air rights would be lobbied from the federal government since the company already holds enough capacity for the two years ahead.

The Australian government rejected last year the application of Etihad to increase its number of flights each week to the country, from the maximum of 84 every seven-day cycle. However, the government granted the airline seven more flights into Australia and another seven routes between Abu Dhabi and Australia provided that the flights would be channelled through regional airports.