"The offering of In Sky Shopping Duty Free will cease from 1st January 2018, with the last flight departing the Australian ports on 31st December 2017."
The decision is due to a global decline in duty-free sales in the past decade, as well as better duty-free shops in airports.
But it's also driven by the increase in competition from online shopping, such as Amazon, which launched in Australia this week.
"If you look at what has been happening in Australian retail over the last year or two, there has been a lot of pressure on retailers with online ordering," Alpha Flight Services marketing and duty free general manager Pat Osborne told travel retail publication DFNI Online.
"The recent launch of Amazon in the country is a prime example.
"The way aircraft are configured these days, they are getting less galley space in order to put more food and water on and things like that."
In July, Virgin Australia launched its own in-flight duty-free shopping service on flights between Hong Kong and Melbourne, and then extended it to flights between Australia and Los Angeles.
That service offers "great potential," Osborne said.