Qanta's long-haul pilots expressed disappointment at Tuesday’s ruling by Fair Work Australia refusing to subject New Zealand-based subsidiary Jetconnect to Australian industrial laws and agreements.

Jetconnect operates Qantas flights into and out of New Zealand. Although these flights appear to be regular Qantas flights – with flying kangaroo livery, QF flightcodes and Qantas crew uniforms – since 2010 they have actually been operated by the wholly-owned, NZ-based company.

Through this arrangement, Qantas Group is able to employ pilots and crew at New Zealand wages and conditions. Jetconnect also pays its tax in New Zealand instead of Australia.

On Tuesday, in a 2-1 split decision, the FWA bench ruled that it was unable to prevent Qantas Group from using the shell company to employ pilots and crew flying into and out of Australia at New Zealand wages and conditions.

But Senior Deputy Drake did find that on the merits and evidence, Jetconnect is indeed a sham company and a mere agent of Qantas Group.

The Australian and International Pilots' Association president, Capt. Barry Jackson, said although he was disappointed by the overall ruling, it was gratifying to read Drake’s assessment.

“AIPA has said from the start that Jetconnect is nothing short of a sham operation and Senior Deputy Drake’s assessment confirms that view,” Jackson said.

“Qantas management have been cynically using this hollow shell of a company to avoid awarding employees Australian wages and conditions on what are ostensibly Qantas flights," he said.

Jackson said the fact that the Qantas Group can continue in this vein sends a worrying signal to corporations around the country.

“This ruling demonstrates the current limits of the Fair Work Act and legislative reform is now needed to enable Fair Work Australia to intervene in cases such as this to protect the rights of Australian workers,” he said.

AIPA said it is considering an appeal.