Etihad ends partnership with Virgin Australia as Qatar hopes to fill the gap

Etihad Airways has told Virgin it’s over amid speculation over the future of their 14-year partnership, as the carrier’s proposed deal with Qatar Airways faces regulatory scrutiny.

Etihad Airways has ended speculation over their future with long term partner Virgin Australia, announcing they will formally end the arrangement in June.

In a case reminiscent of the Seinfeld classic “no, I’m breaking up with you”, Etihad released a statement late Monday they would conclude their codeshare and frequent flyer partnership with Virgin Australia. 

“The decision reflects a divergence in the strategic direction of the respective airlines,” said the statement.

“As a result, when the termination takes effect, passengers will no longer be able to book Virgin Australia-operated flights through Etihad’s booking channels.”

The announcement came after weeks of speculation over the future of the Etihad-Virgin partnership, due to an exclusivity condition in Virgin’s proposed deal with Qatar Airways.

Under the deal, which will see Qatar take a 25 per cent stake in Virgin, the Australian carrier will not be able to codeshare with other airlines on Middle East, Africa or Europe routes.

Virgin Australia told the Australian Competition & Consumer Commission the deal would see the Etihad partnership end in “late 2025”.

The future of the Virgin-Singapore Airline partnership was also impacted by the deal, but to a lesser extent.

Although Singapore Airlines and Virgin will no longer codeshare on flights to Europe, the Middle East or Africa once the Qatar deal is finalised, Velocity frequent flyers will still be able to earn and redeem points on Singapore-operated flights anywhere in the world.

Virgin Australia is choosing Qatar Airways over Etihad Airways in a new Middle East partnership.

Virgin Australia first partnered with Etihad in 2010, with the Gulf carrier taking a 20 per cent stake in the airline as well as a board seat.

When Virgin sank into administration in 2020, and was bought by US private equity firm Bain Capital, Etihad was among the first overseas airlines to express interest in resurrecting their codeshare.

However, the end of the 14-year partnership was not expected to have a significant impact on the Abu Dhabi-based carrier, which operates a fleet of 93 aircraft on more than 80 routes.

Another ten new destinations will be announced this month, with Etihad also planning to increase flights to Melbourne and Sydney next year.

Bureau of Infrastructure, Transport and Regional Economics data for August showed Etihad flights to and from Australia were consistently full, with 89 per cent of seats used on inbound routes, and 93 per cent outbound.

“Globally we welcomed 13.6 million passengers in 2024 as of September, a 35 per cent increase over the previous year, and our rolling 12 month total stands at over 18 million, up from 10 million in 2022 underscoring the pace of our growth,” said an Etihad spokeswoman.

Qatar Airways was also seeing healthy seat utilisation rates, with 87 per cent of its aircraft full on inbound routes, and 91.2 per cent outbound.

The ACCC is expected to announce its interim decision on the Qatar-Virgin co-operation by the end of the month to allow Virgin to start selling Qatar-operated flights due to take off in June.

The wet lease arrangement means Virgin Australia will market and sell tickets on the services, operated by Qatar Airways’ aircraft and crew. 

Initially, the arrangement is for five years, after which Virgin and Qatar would have to ask again for authorisation.