Virgin Australia wins interim authorisation from watchdog to sell flights operated by Qatar

Virgin Australia has been approved by the ACCC to begin selling tickets for Qatar Airways flights as part of the airlines’ planned partnership.

Virgin Australia first partnered with Qatar Airways in 2022 and is about to get even closer to the Doha-based airline.

The competition watchdog will allow Virgin to start selling tickets on Qatar Airways-operated flights to Doha, but has warned the closer partnership between the airlines remains subject to final approval by the regulator and the Foreign Investment Review Board overseen by federal Treasurer Jim Chalmers.

In what some have described as bilateral air rights by stealth, Virgin Australia is seeking to wet lease Qatar Airways aircraft and crew in a deal that will double the Doha-based carrier’s capacity into Australia.

As a first step towards final approval, Virgin and Qatar sought an interim authorisation from the Australian Competition and Consumer Commission to begin preparations for the extra 28 flights a week to Doha.

On Friday the ACCC granted the interim authorisation, but made it clear Virgin and Qatar would need to refund or re-accommodate any passengers booked on the flights should they not get the final nod.

ACCC deputy chair Mick Keogh said there was still much work to be done before a draft determination was made early next year providing the commission’s preliminary views.

“The parties have certainly put to us that there are benefits in terms of the available flights between Australia and the Middle East, and we’ve had submissions that suggest there are detriments associated with the wet lease arrangements because of the staffing situation that would apply to those,” Mr Keogh said. “Our legislation requires us to weigh those up and come to a conclusion.”

A final determination by the ACCC was expected in March or April, which would be shared with the FIRB.

But Mr Keogh said the effect on competition and consumers was only one of the matters the FIRB applied in their “national interest” test to determine whether Qatar Airways should be allowed to take a 25 per cent stake in Virgin.

The acquisition was expected to position Virgin Australia for an initial public offering next year, and help the airline compete more evenly with Qantas and Jetstar.

Qatar Airways and Virgin Australia hope to co-operate more closely in 2025.

The purchase was considered to be contingent on the wet lease deal being approved, in what Virgin said would be a “win-win” for customers. With tickets for the new flights going on sale in mid-December, customers were likely to be wooed with very attractive airfares to Doha and beyond.

“I’d be surprised if Virgin and Qatar didn’t launch with a massive sale, so this could be a very merry Christmas for travellers planning ahead for their holidays in 2025,” Executive Traveller editor David Flynn said.

Virgin Australia chief strategy and transformation officer Alistair Hartley said the direct economic benefit of the new services to the Australian economy was estimated to be in the vicinity of $3bn over the proposed five-year authorisation period. “This is an important and positive step in the regulatory progress,” he said of the interim authorisation.

Qatar Airways chief commercial officer Thierry Antinori was similarly buoyant following the ACCC announcement.

“This is a significant step forward in delivering increased benefits to Australian travellers,” he said. “We are pleased to be helping Virgin Australia launch these new services to Qatar and creating further business opportunities for our travel trade partners.”

Mr Antinori said they would continue to work closely to progress the remaining regulatory approvals.

Central to the concerns of those opposed to the deal was the perception the additional flights by Qatar using Virgin Australia’s bilateral air rights was a “backdoor approach” to gain access.

In a submission to the ACCC, the Australian and International Pilots Association said “the integrity of bilateral air service agreements was at stake in the matter, which would have broader implications for the local aviation workforce and industry”.

“This bypass undermines the intent of the bilateral agreements and sets a concerning precedent,” wrote AIPA president Tony Lucas, a Qantas A330 captain. “Other foreign airlines could follow suit, acquiring minority stakes in smaller Australian carriers to exploit similar arrangements. Such practices could destabilise the Australian aviation market and diminish the value of carefully negotiated bilateral agreements..”

Virgin Australia CEO Jayne Hrdlicka has described the deal with Qatar as a ‘career highlight’.

The move by Qatar and Virgin followed the government’s controversial refusal of Qatar Airways’ application for more flights in 2023 on the basis it was “not in the national interest”.

The failure of Transport Minister Catherine King to explain why it was “not in the national interest” prompted a Senate inquiry to determine why the decision was made. The inquiry examined how Qantas might have influenced the decision, particularly given the lobbying power of the airline and the close friendship between former CEO Alan Joyce and Prime Minister Anthony Albanese.

Despite the political furore around the decision and the ongoing controversy, Mr Keogh said the ACCC would not be swayed by public – or government opinion.

“Ultimately our prescriptive requirements are quite clear in the legislation and we have to assess the likely benefits, weigh those up,” he said.

“It’s not always a straight quantitative process as you can imagine, but whether governments or others have different views, that doesn’t really come into our consideration.”