Australian travellers are in line to enjoy cheaper airfares after the federal government gave its blessings to Qatar Airways taking a 25 per cent stake in Virgin Australia, helping the local carrier to take the fight up to Qantas on international travel.
Under the proposed deal, Virgin, in partnership with Qatar Airways, will launch 28 new weekly return services between Doha and Perth, Brisbane, Sydney and Melbourne. Qatar Airways would operate the new flights through its aircraft and crew, in what is known in the aviation industry as a “wet lease” arrangement.
Having already received approval from the Australian Competition and Consumer Commission (ACCC) this month, getting the tick from the federal government was the last hurdle for the Virgin-Qatar tie-up.
Virgin’s competitive position will be bolstered by its deal with Qatar.Credit: Oscar Colman
Treasurer Jim Chalmers removed that hurdle on Thursday but added that the approval was conditional on Virgin’s board having Australian executives in it, a commitment from the airlines to protect customer data and safeguarding Australian jobs.
As part of the deal, Qatar can appoint two of the 12 Virgin board members, one of whom must be an Australian citizen, Chalmers said.
The airlines have also agreed to a secondment program that will place 20 pilots and 40 cabin crew in Doha to gain long-haul flying experience and creating backfill positions in Australia, and specific consultation with unions.
Treasurer Jim Chalmers says a deal that will allow Qatar Airways take a 25 per cent stake in Virgin Airlines was made “in the national economic interest”.Credit: Alex Ellinghausen
The “wet lease” arrangements had previously raised concerns from unions about their ability to potentially undermine working conditions of Australian cabin crew, ground crew and pilots.
Transport Workers’ Union national secretary Michael Kaine on Thursday said while the acquisition had necessary safeguards, concerns remained over labour standards.
“There’s a huge potential here to build Virgin’s international footprint and ensure opportunities for workers,” he said.
Chalmers on Thursday added the deal would put “downward pressure” on the price of flights and attract more tourists.
“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,” he said.
“More flights is good for competition, more competition is good for prices and that’s been my motivation here.”
Qatar first announced its plans to acquire a stake in Virgin from its owner Bain Capital on October 1, 2024, as part of a deal that would carve out a bigger presence in the Australian market after it was denied more flights by the Albanese government in 2023.
Australian Travel Industry Association chief executive Dean Long said that travellers would benefit most from improved flexibility and value.
“You can find the right airplane, the right airline at the right time to get you safely where you need to be,” he told AAP.
Meanwhile, Australian Airports Association chief executive Simon Westaway said regional Australia also stands to benefit through improved inbound tourism connections, sales and marketing visibility to these destinations.
“This deal is a major win for the aviation industry and the Australian flying public,” he told AAP.
The approval is also a major coup for Virgin, which recently overtook Qantas to become Australia’s largest and most reliable airline at the end of last year.
Virgin this month garnered a domestic market share of 35 per cent as of December, surpassing Qantas’ 34.6 per cent, the competition watchdog said in a report released by the ACCC
It’s the first time Qantas has been pushed from the top spot since early 2022. Jetstar, the low-cost airline brand owned by Qantas, had 29 per cent of the market.
Virgin’s outgoing chief executive Jayne Hrdlicka hailed the deal with Qatar as major turning point for the airline, which is still expected to eventually list on the Australian sharemarket. Bain postponed plans for an initial public offering of Virgin in 2023, and is yet to announce a replacement for Hrdlicka.
“Qatar Airways’ investment is a huge vote of confidence in our business and Australian aviation more broadly,” she said. “We welcome a new era for Virgin Australia.”
Qantas, meanwhile, has taken the approval of the deal in its stride, with chief executive Vanessa Hudson on Thursday telling this masthead that the airline wasn’t afraid of extra competition.
“We always said that we welcome competition, and we also said that we won’t go and oppose the results”, which Qantas had expected to land in Virgin’s favour, Hudson said.
Hudson’s confidence about the Virgin-Qatar deal is a marked change from her predecessor Alan Joyce, during whose tenure Qantas had heavily lobbied the government to block outside competition entering the market. Hudson was named CEO in 2023, taking over from Joyce.
With Riley Walter, AAP and Bloomberg
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