ACCC set to give green light to deeper Virgin-Qatar partnership

The competition watchdog is considered close to making its decision on the Virgin-Qatar deal that will see the Gulf carrier double its flights into Australia.

The competition watchdog is expected to grant interim authorisation for Virgin and Qatar Airways to co-operate on international flights from Australia under a wet lease deal signed along with Qatar’s equity investment in ­Virgin.

The deal effectively provides Qatar with a backdoor path to increase flights into Australia after being knocked back by the federal government last year.

It remains unclear exactly why Qatar was refused, with the government suggesting only that additional flights by the Doha-based airline were not in the national ­interest.

As a result Qatar has been restricted to 28 flights a week into Australia’s major airports of Sydney, Brisbane, Melbourne and Perth.

In comparison, Emirates has the right to operate 105 a week, and will shortly be flying 77 services (up from 70), while Etihad could fly as many as 56 but currently operates only 14 a week.

The Australian Competition & Consumer Commission interim authorisation, expected on Wednesday, would see Qatar operate an additional 28 services a week as “Virgin Australia” flights from next June.

Virgin has sought a quick answer from the watchdog about the arrangement so it can get on with the job of selling seats on the ­services.

Qatar Airways and Virgin Australia are expecting some good news from the ACCC as early as Wednesday.

More than 20 submissions have been lodged in relation to the proposal, most of which support the deal and increased flying by Qatar Airways.

The European Australian Business Council suggested the partnership would “significantly stabilise and strengthen the competitive market for international travel”.

“The partnership will also enhance options for cargo and other transport services in addition to passenger travel,” said council chief executive Jason Collins.

Destination NSW said the co-operation between Qatar and Virgin had the potential to deliver positive visitor economy outcomes for the state.

Travel buying network CT Partners said Qatar Airways had been a “strong supporter of the Australian market for the past 15 years and were also supportive of the Australian travel trade”.

“Virgin Australia would also benefit greatly from access to Qatar Airways’ fleet, technology and reporting systems, which would improve the customer experience both domestically and internationally,” CT Partners’ submission states.

There were concerns raised by the Flight Attendants Association of Australia as well as Qantas over the open-ended nature of the wet lease deal, which will see Qatari labour used on Virgin flights. FAAA federal secretary Teri O’Toole said they would support an arrangement whereby after an agreed period, Qatari aircraft would be operated by Virgin cabin crew and pilots.

“In other words, the FAAA would support a dry lease arrangement as this would protect Australian jobs,” said Ms O’Toole.

“Any alternative arrangement undermines this principle and would thus be unacceptable to the FAAA as it would result in Qatar Airways, a carrier owned by a foreign government, having increased access to the Australian market with no benefit to Australian jobs.”

Virgin CEO Jayne Hrdlicka told the Australian Airports Association conference last week the arrangement would in fact increase employment opportunities, with pilots and cabin crew to be offered the chance of secondments with Qatar. She said that would mean Virgin had to replace those people in Australia, opening up more jobs at the airline.

Ms Hrdlicka is expected to leave Virgin once the deal is finalised, and Qatar may provide her replacement.

Neither Qatar nor Virgin’s owner Bain Capital will say what sort of money is changing hands, but the deal is likely to be the cornerstone investment for the Virgin float next year, and will underwrite the valuation.