Many airlines operate internal flights in Europe, eg LAN operates Madrid to Frankfurt. It is less common these days for tag flights as aircraft have the legs to do direct, however the history is there and still goes on today.
I think you will find these countries have reciprocal rights. Just because LAN has permission does not mean anybody can do it. As I said EK can't just fly around Europe as they please.
What the Australian government is doing is allowing unregulated foreign carriers to operate domestically in Australia without any reciprocation for Australian airlines.
At the end of the day BNEA320 is right where are they going to fly domestically anyway?