Qantas reacts to Virgin, Qatar merge

Qantas’ boss has revealed what the airline thinks about the Virgin and Qatar’s merge after the Doha carrier was blocked from expanding in Australia.

Virgin Australia and Qatar Airways have officially been given the green light by the Australian Government to partner in a move predicted to shake up the local aviation industry.

The merge means Qatar Airways will have a minority 25 per cent stake in the Aussie carrier, in turn expanding Virgin’s flight network.

Treasurer Jim Chalmers is responsible for the Foreign Investment Review Board (FIRB), which has now approved the acquisition.

“On the advice of FIRB, I have approved this proposal subject to legally enforceable conditions that ensure Australian representation on Virgin’s board and protection of its customer data,” Mr Chalmers said.

The Australian Government approved Qatar Airways Group’s minority 25 per cent stake in Virgin Australia.

“The CEOs of Virgin Australia and Qatar Airways have written to me with assurances that this investment will create employment benefits and job growth opportunities for Australians.

“This proposal will deliver more flights for Australians and support secure Australian jobs. It is expected to strengthen competition in the aviation sector.”

Virgin has largely been out of the international market for four and a half years – with its current overseas routes including Japan, Bali, New Zealand, Fiji, Vanuatu and Samoa.

But since partnering with the major carrier, it will now crack the Middle Eastern market operating an additional 28 flights a week to Doha on behalf of the Australian carrier.

The deal means Virgin can lease planes and staff from the Qatari airline and compete on the route.

Virgin Australia’s long-haul flights to Doha commencing from June 1.

Virgin Australia CEO Jayne Hrdlicka told news.com.au the move will strengthen the local aviation industry.

“It brings deeper resilience to Virgin Australia, it brings a tougher competitive edge to Virgin Australia and that’s nothing but great for consumers,” she said.

“It also means Australians have greater choices, and better choices with respect to travelling long-haul to Europe through the Middle East and into Africa.

“We’re really excited about the opportunity that better competition is going to create for consumers.”

The Australian government needed to approve the move under foreign investment rules, with the tick of approval announced on Thursday morning.

It now awaits a decision from the International Air Services Commission (IASC) on what

is an uncontested allocation of air rights for services between Australia and Qatar.

The Australian Competition and Consumer Commission (ACCC) will deliver its final determination in coming months but it’s considered a done deal, after the watchdog’s draft decision this month found the flights would benefit consumers and enhance competition.

Following the ACCC’s interim authorisation, both carriers have been able to market and sell the services since November 29, 2024.

Qantas responds

The announcement was ‘welcomed’ by Qantas CEO Vanessa Hudson despite the airline’s move to block the Doha-based carrier from expanding services itself in 2023.

During Qantas Group’s half yearly results announcement, also on Thursday morning, CEO Vanessa Hudson “welcomed the competition”.

“We always said we welcome competition and we also said we weren’t going to oppose the result, so from the outset that’s been our position and I think the announcement today was expected,” she said.

The move will effectively double the number of flights the Doha-based carrier operates to Australia, which would increase competition with Qantas and its One World partners.

“Our focus is about looking after our customers and continuing with investments that we are doing and we feel really confident in being able to compete not just against Qatar and Virgin, but we compete against 52 international airlines globally.”

Ms Hudson said the government has struck the right balance.

“Having more competition actually makes us better and we are focused on delivering for our customers and investing in our aircraft and investing in our people.”

Qatar agreed to the Virgin partnership and the lease after it was blocked from flying the services itself by the Albanese Government after opposition from Qantas.

The partnership will place downward pressure on airfares.

In 2023, Qatar announced it wanted to add 21 weekly flights to the 28 it already operates.

At the time, former Qantas boss Alan Joyce maintained his argument that it could “distort the market”.

“There shouldn’t be rights granted when there’s huge amount of capacity being put back in the market and doubling those rights could actually distort the market,” he said, referring back to Qantas’ stance in a submission made opposing Qatar’s request in October 2022.

He also rejected accusations that Qantas was hoarding flight slots at Sydney Airport to stop other airlines from getting them.

What the deal means for Aussies

Ms Hrdlicka said the partnership will give Virgin customers better value and choice in travelling internationally.

“It means better competition so they can expect us to continue to fight hard and invest in our business domestically,” she said.

“We’ve sold over 50,000 seats so far. We’ve had “very big and very exciting” sale periods with airfares to Europe that were business class in the $8500 round trip range and economy fares in $1500 to $1800 range.

“So it’s definitely already happening,” she said. “We know that we’ve sparked other airlines to go on sale and this is just better competition.”

Since the announcement of the merge, Emirates has introduced a third non-stop service between Melbourne and Dubai starting from March 30, 2025 and introduced its premium economy product to travellers out of Brisbane for the first time.

Fellow Middle Eastern carrier Etihad launched a complimentary status matching offer where Gold Velocity members or Gold Privilege Club members were able to enjoy a status match to Etihad Guest Gold for six months at no charge - and Singapore Airlines announced an increase in its capacity between Brisbane and Singapore.

Flight Centre Corporate Global COO Melissa Elf agreed the move would bring about stronger competition and capacity, in turn bolstering choice and affordability in travel for Aussie corporates and holidaymakers.

“FCM Travel and Corporate Traveller have been actively calling for more international capacity and competition to our shores, so we’re pleased to see this welcomed by Australia,” Ms Elf said.

“The approval of the deal will support the recovery of our international visitor economy, and strongly contribute to corporate travel recovery.

“It will not only make travel to the Middle East and Europe more affordable for our corporate travellers, but it will importantly see inbound benefits to Australian trade and tourism.”

Ms Hrdlicka said there will be a $3 billion benefit to the economy over the course of the five years of the “wet lease” arrangement.

“It will bring an influx of revenue into the country that goes towards services … so it nothing but good for Australian jobs.”

Subject to IASC approval, Virgin Australia will return to long-haul flying in June 2025, with flights from Sydney, Brisbane, and Perth to Doha.

Flights from Melbourne to Doha are scheduled to commence in December 2025. These flights will be operated using aircraft wet-leased from Qatar Airways.