Government approval granted for Qatar Airways to buy 25 per cent stake in Virgin Australia
A major shake-up for international travellers and Virgin Australia has been greenlit by the Albanese government.
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Qatar Airways’ bid to acquire a 25 per cent stake in Virgin Australia has been approved by the Albanese government, which will enable more Aussies to travel around the world for less.
The deal opens the way for Virgin to lease planes and staff from the Qatari airline and compete on routes to and from Australia and Doha, beginning in June.
Discussing the partnership Virgin Australia chief executive Jayne Hrdlicka said it was a “great day for Australians” who will benefit from cheaper flights with “the best airline in the world”.
“It improves competition domestically, it improves competition internationally and we believe it gives us the opportunity to bring better value choice to Australians,” she told NewsWire.
“We’re doing that with the world’s best airline, so we’re bringing a great product and experience to Australian travellers.”
Ms Hrdlicka said Thursday’s announcement would not only benefit travellers but the country as a whole.
“Absolutely, it will bring $3bn in value, we estimate over the course for the five years that gets pumped into the economy as a consequence of increased visitation and the knock on activity throughout the country as people then fly domestically,” she said.
The Australian government needed to approve the move under foreign investment rules, with the tick of approval announced on Thursday morning.
The deal will now be subject to International Air Services Commission (IASC) approval.
The IASC has to approve an allocation of air rights for flights between Australia and Qatar.
A Virgin spokesman said this international commission submission was uncontested.
This type of lease arrangement is known as a ‘wet lease’. Virgin is required to work toward a ‘dry lease’ in the coming years, where its own staff and planes it leases are used on the Doha routes.
Virgin Australia says entering the market for flights to and from the Middle Eastern hub will push down prices.
The deal comes at a time when Turkish Airlines and multiple Chinese airlines are running more flights to and from Australia.
Subject to this final approval, flights from Brisbane, Perth and Sydney to Doha will begin in June. Tickets have been on sale for months, with Melbourne to Doha offerings will begin in December.
People stepping off a Virgin Australia flight in Doha are then connected to Qatar Airways’ expansive international routes.
Concerns had been raised by pilot and cabin crew unions about staff working under less strict Qatari labour laws.
VIRGIN STAFF “KEEN” ON DEAL
Virgin Australia said the deal would add new jobs in Australia as well as opportunities for those who wanted to work overseas.
“For our people, it's a great opportunity to go and explore the world because we have secondment opportunities with Qatar for our people.
“I think for the community generally, it is a great thing because it means more jobs. “There’s jobs with Virgin Australia, more jobs around the airport, given the increase activities and there will be more jobs created in the tourism and visitor economy as a consequence of this agreement.”
Virgin and Qatar Airways have committed to a secondment program that will give long-haul flight experience to 20 pilots and 40 cabin crew in Doha, while creating 60 backfill jobs in Australia.
The airlines have to consult with unions about potential future dry lease operations in which Virgin Australia would lease its own planes, staffed by its own crew, within no more than three years.
This future dry lease would need to use Australian workers.
In a statement on Thursday, Virgin said staff were keen.
“Following consultation with unions and relevant cabin crew and pilot communities, there has been an overwhelming response to the expressions of interest for secondment opportunities for Virgin Australia pilot and cabin crew with Qatar Airways,” the statement said.
“This will also provide promotional opportunities for other team members and new hires through the backfilling of seconded staff.”
THE HUNT FOR A NEW CEO
The new deal comes as Virgin chief executive looks to step away from the helm after four and half years in charge of the airline.
“I feel so proud of the achievements of the team over the last four and half years. So I fell like it's a perfect time to make sure that I transition someone else into the role,” Ms Hrdlicka said.
“For me personally it's a great opportunity to take a little bit of a break.
“It’s been quite an intense four and half years coming through Covid and then rebuilding the airline to be in a position we’re in today and it has been one of the more extraordinary opportunities for me as an individual.
“But it also been pretty punishing in the amount of time and energy it’s taken and it’s time for a little bit of a break especially after the Covid period.”
TREASURER FLAGS JOBS FOR AUSSIES
Treasurer Jim Chalmers is responsible for the Foreign Investment Review Board (FIRB), which has now approved the 25 per cent acquisition.
Appearing in the NSW seat of Hunter, the Treasurer said the deal was in Australia’s national economic decision as it would help with the cost of flying as well as add to the overall economy.
“This is consistent with and aligns with the strong advice provided to me by the Foreign Investment Review Board,” Mr Chalmers told reporters.
“It means more options and more flights for Australians.
“It means more competition in aviation and it means more customers for our tourism businesses here and right around Australia.”
Mr Chalmers said he had approved Qatar’s bid based on “very strict, enforceable conditions”.
These include requirements on local jobs, data sharing and the number of board positions the foreign carrier could hold on Virgin’s board.
“There’s been a lot of consultation with unions and businesses and communities, undertaken by Treasury, there was Foreign Investment Review Board, and by myself as well and other ministers,” he said.
“We’re really confident this is the right call, because more competition, more flights, more options, puts downward pressure on prices.”
Originally published as Government approval granted for Qatar Airways to buy 25 per cent stake in Virgin Australia
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