Australia’s competition regulator has given Qantas Airways and Emirates final approval to form a five-year global alliance, with special conditions for flights across the Tasman Sea.

A merger of Qantas and British Airways must involve control of the “Flying Kangaroo” remaining in Australia, officials in the country insisted today, as Qantas shares surged on hopes a deal would see it emerge a stronger competitor to big regional rivals like Singapore Airlines.

Qantas Airways said today it considers that a €5.9bn takeover bid for the airline has failed, after regulators refused to step in and save it.