Virgin Blue has proposed an alliance with Etihad to launch services from Australia to Abu Dhabi, and has let the competition regulators know exactly what it thinks of Qantas' objections.

In a letter to the ACCC, Virgin Blue described Qantas' bid to ensure their expansion plans are shelved as "self-serving", as a war of words begins to heat up.

Virgin Blue says a decision not to allow the alliance would hinder much needed competition in Australia, and added that the submissions Qantas has made to try and halt its plans were lacking any credibility.

In a report from Travel Today, Virgin Blue stated “The alliance can have no adverse effect on competition...as without the alliance V Australia will not operate to the Middle East and will not be able to offer services to destinations beyond/behind Abu Dhabi."

“If Qantas’ position was to be adopted, it would simply have the self serving result of delaying a pro-competitive initiative in which Virgin Blue, through V Australia and Etihad Airways will provide increased competition to Qantas.

"Delaying the alliance would be to the detriment of passengers.”

The ACCC recently issued a media release proposing to deny authorisation for an alliance between Virgin Blue and Air New Zealand on their flights between Australia and New Zealand. 

In the statement they said that around one million passengers a year may be adversely affected by the alliance.