Qantas warns ACCC to consider threat to jobs from Virgin-Qatar wet lease flights

The airline says the proposed Virgin-Qatar tie-up would see industry pay and conditions undermined with imported Qatari labour.

Qantas has warned a mooted Virgin-Qatar Airlines deal would see industry pay and conditions undermined with imported Qatari labour as part of controversial wet lease arrangements.

The warning was part of Qantas’ submission to the Australian Competition & Consumer Commission, which is examining whether the deal should be approved.

Under the deal, Qatar Airways will provide aircraft, pilots and cabin crew for flights sold by Virgin Australia between Sydney, Melbourne, Brisbane, Perth and Doha.

The 28 additional flights a week will effectively double Qatar’s capacity into Australia, after the airline was denied an increase in bilateral air rights by the federal government last year.

Qantas’s submission to the ACCC by international business chief Cam Wallace, said they did not object to Qatar Airway’s buying a 25 per cent stake in Virgin Australia but “some aspects of the partnership may result in public detriment and deserve further scrutiny”.

“The proposed wet lease enables Virgin Australia to schedule services crewed entirely with Qatari pilots and crew, whose pay and conditions are substantially less than Australian-based crew,” wrote Mr Wallace.

“On face value, that means Virgin Australia will have no incentive to develop its own international services using Australian crew on these routes if it can effectively bypass Australia’s laws and regulations.”

Qantas had its own wet lease arrangement with Finnair, but there was a two-year time limit on the deal before it switched to a dry lease — meaning Qantas’ own crew would be used from that point.

Mr Wallace said without a time limit, Virgin would be able to “permanently use Qatari labour at the expense of Australian jobs”.

“Left unchecked, the proposed conduct will signal to the wider aviation industry that bilateral air service agreements, which have been the bedrock of the sector since the end of World War II, can be readily circumvented through wet leasing,” Mr Wallace said.

The Qantas submission referred to regulations adopted by the European Union, which recommended time limits be placed on wet leases to “ensure they’re not misused”.

Qantas International CEO Cam Wallace has warned the ACCC to consider conditions for the Virgin-Qatar partnership that will benefit Australia. Picture: Pema Tamang Pakhrin

The EU also advised that wet-leased aircraft should not be used to circumvent applicable laws, regulations or international agreements.

“Qantas acknowledges the benefit to consumers and the local aviation industry that would be delivered by Virgin Australia re-establishing its own long-haul capacity but encourages Australian regulators to consider conditions that would ensure that it does so in a way that benefits Australia,” wrote Mr Wallace.

Other submissions to the ACCC have expressed similar concerns about the proposed open-ended wet lease, and restrictions on codeshares with Virgin’s partner airlines Etihad, South Africa Airways, Virgin Atlantic and Singapore Airlines.

Sydney Airport was firmly in favour, suggesting the deeper co-operation between Virgin and Qatar Airways would lead to lower airfares.

Qatar Airways was voted by travellers as the world’s best airline this year and flies to more than 100 destinations from its base in Doha.

Since emerging from administration in late 2020, Virgin Australia has been restricted in its international operations by a lack of widebody aircraft.

The carrier currently uses Boeing 737s to fly to short haul destinations including Bali, Queenstown, Fiji, Apia and Vanuatu.

From February, Virgin Australia will cease to fly to Tokyo from Cairns, due to poor demand.

Originally published as Qantas warns ACCC to consider threat to jobs from Virgin-Qatar wet lease flights