Submissions to ACCC reveal concerns about Virgin’s proposed tie-up with Qatar Airways

Virgin Australia’s plans for a deeper partnership with Qatar Airways have some worried about what it will mean for aviation workers and competition.

Plans for Qatar Airways to fly more services into Australia on behalf of partner Virgin have been welcomed by Sydney Airport but slammed by several others in submissions to the competition watchdog.

The Australian Competition and Consumer Commission is examining the proposal for Qatari aircraft and crew to fly more services from Doha to Australia, on behalf of Virgin which would sell tickets on the flights.

As part of the deal, Virgin would end or restrict its codeshare with other airlines on routes into Europe, the Middle East and Africa including Etihad, South Africa Airways, Virgin Atlantic and Singapore Airlines.

To date five submissions have been published by the ACCC ahead of an “interim authorisation” this month to allow Virgin to start selling the Qatar-operated flights.

Sydney Airport group executive of aviation growth and strategy Greg Botham said the 28 additional flights a week into Australia would “enhance competition on routes to the Middle East, and would likely benefit passengers through reduced prices and increased choice”.

“This is particularly important for Australians in the context of cost-of-living pressures and an environment of higher airfares,” wrote Mr Botham.

Other submissions came from private individuals who raised concerns about the proposed wet lease arrangement that would see Qatari aircraft and crew operate Virgin Australia flights to Doha.

Virgin Australia’s deeper partnership with Qatar Airways has raised some red flags in submissions to the competition watchdog. Picture: Virgin Australia.

Aviation industry employee Scott Rackley warned the open-ended wet lease agreement would set a “dangerous precedent and potentially disregard the future of Australian aviation professionals”.

“This wet lease agreement reintroduces not just the aircraft type, but the very aircraft that

Virgin Australia once operated prior to the Covid-19 pandemic — yet this time, with foreign

crews instead of the dedicated Australian workers who once upheld Virgin Australia’s

reputation,” wrote Mr Rackley.

“Not only does this arrangement threaten Virgin Australia jobs but it also potentially opens the floodgates to foreign labour dependence in aviation, simultaneously endangering employment at other carriers, including Qantas.”

Justin Thomas’ submission was concerned by the “exclusivity” of the proposed partnership, which he said would “lock Velocity frequent flyer members into booking with Virgin and flying on Qatar services”.

“It should be clear that this strategy of exclusive geographic partners is a detriment and not conducive to improving competition,” Mr Thomas wrote.

“Virgin should be encouraged to expand its network of partners to maintain choice for passengers, not become a subsidiary of a single foreign airline.”

Max Snow said if Qatar Airways ended up being the sole partner of Virgin on European routes, then Velocity members would lose the cheaper pricing, and greater flexibility in schedules and lounge benefits currently enjoyed.

“I would welcome more flights and a greater partnership, however to allow Qatar Airways an exclusive monopoly on redemptions and benefits provision to Virgin Australia customers flying between Australia and Europe (as well as the Middle East and Africa for that matter) would be a grave mistake which will work to significantly lessen competition,” wrote Mr Snow.

More submissions were expected to be published by the ACCC in coming days with Thursday November 7 set as the deadline.

Qantas has indicated it would not oppose Qatar Airway’s proposed 25 per cent investment in Virgin Australia but was expected to make a submission to the ACCC.

Speaking at the airline’s AGM last month, chairman John Mullen said he believed regulators would assess the Qatar-Virgin deal “in the context of Australian jobs and employment, the effectiveness of Australia’s air services framework, and the appropriateness of wet-leasing arrangements over the medium to long term”.

Qantas used Finnair aircraft and crew on services between Sydney, Bangkok and Singapore in a two-year deal. From next year Qantas’ own pilots and crew would operate the Finnair A330s in what was known as a “dry lease” arrangement.

Originally published as Submissions to ACCC reveal concerns about Virgin’s proposed tie-up with Qatar Airways