British billionaire Richard Branson's Virgin Atlantic said Wednesday it was axing Sydney to Hong Kong services due to increasing costs, leaving British Airways the last major European carrier flying to Australia via Asia.

Virgin chief executive Craig Kreeger said ballooning costs coupled with a challenging economic environment had affected the airline's profitability in a move that will be a boost for Qantas and Cathay Pacific, which also ply the route.

"Despite the best efforts of our employees, external factors such as increasing costs and a weakening Australian dollar have affected our profitability," he said.

"These are still difficult times for the airline industry and as part of our strategy to operate more efficiently we need to deploy our aircraft to routes with the right level of demand to be financially viable."

The last flight from Sydney will be on May 5, although Virgin will continue to operate its Hong Kong-London segment.

Branson's Virgin Group owns 51 percent of Virgin Atlantic. The mogul also holds a stake in Virgin Australia, an airline he co-founded in 2000.