Dubai-based Emirates and Australian flag carrier Qantas have signed a 10-year cooperative agreement that is set to shake-up the global aviation sector.

Under the terms of the deal, Qantas will shift its European hub from Singapore to Dubai, effectively abandoning the once lucrative Sydney-Singapore-London ‘Kangaroo route’.

Qantas will gain exclusive landing rights to Emirates’ Terminal 3 at Dubai International airport. The two airlines will operate 98 weekly flights between Australia and Dubai, including four daily A380 flights.

Qantas will also launch daily A380 services from Sydney and Melbourne to London via Dubai. Together, the airlines will offer seven daily A380 flights to London Heathrow.

In turn, Emirates will gain access to Qantas’ domestic network of 50-plus destinations and 5,000 flights a week. 

The non-equity agreement will see the airlines also collaborate on schedules, sales and pricing, as well as a benefits sharing model.

Qantas has faced increasing competition on the Kangaroo route from Asian rival Singapore Airlines in recent years. Its international division lost about $300m in 2011 alone.

As part of the Emirates deal, Qantas will abandon its revenue and code-sharing deal with British Airways in March 2013. The Emirates agreement is scheduled to launch the following month.

The agreement also marks a major shift in strategy for Emirates, which has previously shirked alliances with rival international carriers.

While the airline has grown to become the largest international operator in the world, its go-it-alone strategy has seen it struggle to gain access to domestic markets.

By comparison, Abu Dhabi’s Etihad Airways established an alliance with Qantas’ main Australian rival Virgin Australia last year. Etihad recently extended this relationship, taking a 10 per cent equity stake in the carrier. Virgin Australia currently operates flights between Australia’s east coast and Abu Dhabi and also boasts an extensive domestic network.

Australia ranks as one of Emirates’ fastest growth markets. In 2011, flights to the Australasian cities of Sydney, Melbourne, Brisbane and Perth and Auckland accounted for almost 20 per cent of Emirates’ international revenues.