Virgin Australia has cancelled its staff travel agreement with Brunei's national carrier in light of the Southeast Asian nation's introduction of harsh new religious laws that include the death penalty for gay sex.

Australia's number-two airline has an "interline" arrangement with Royal Brunei, which means that Royal Brunei customers can book tickets on some Virgin flights within Australia.

The suit of Islamic laws introduced under Brunei's Sultan Hassanal Bolkiah includes death by stoning for sex between people of the same gender. Credit:EPA

And until now, Virgin staff have also been able to book discounted tickets on Royal Brunei flights for leisure travel.

But Virgin has put an end to the staff travel arrangement after the tiny but oil-rich nation on the island of Borneo became the first country in the region to introduce sharia law.