Virgin submission to ACCC points to Qantas hypocrisy on Qatar deal

Outgoing CEO Jayne Hrdlicka is making sure the Australian public hears more jobs are likely to come from the partial takeover by Qatar Airways.

Virgin Australia outgoing CEO Jayne Hrdlicka. Picture: Supplied

Virgin Australia is leaving nothing on the table to try to have its deal with Qatar Airways approved, taking the unusual step of responding to a slew of arguments against the deal raised in submissions to the competition regulator.

Qatar has proposed taking a 25 per cent stake in Virgin Australia and providing a five-year “wet lease” agreement, which means Virgin customers booking tickets to Europe via Doha will fly on Qatar aircraft flown and serviced by Qatar crew.

Fears raised about the deal include that jobs may be outsourced to Qatar as a result of this wet lease proposal. In its submission to the Australian Competition & Consumer Commission last month, Qantas said the wet lease arrangement could allow Virgin to “permanently use Qatari labour at the expense of Australian jobs,” unless limits were set.

“The proposed wet lease does not risk Australian jobs,” Virgin said in its ACCC response to submissions. “The contention that … somehow removes or threatens Australian jobs does not reflect reality.”

The reasoning for Virgin’s response is because the wet lease agreement is for new services for Virgin. Virgin does not currently fly to Doha or Europe and has limited international operations since its collapse in 2020 to destinations such as Bali, New Zealand and some Pacific Islands.

Last week, the Australian Federation of Airline Pilots came out in support of the deal as long as it had a five-year cut-off and Virgin agreed at three years whether it would commit to flying its own aircraft or to end the route.

“There are no Australian jobs … being replaced or removed as a result of the decision to use a wet lease,” said Virgin in its ACCC submission.

“All existing services across Virgin Australia’s current network (domestic and international) are currently operated by local Australian crew. Despite their submission and public statements, this is in contrast to Qantas Group, which relies heavily on foreign labour on its Qantas and Jetstar international services,”

Since being purchased by Bain Capital in 2020, Virgin has run a lower cost operation, scrapping loss-making long-haul services such as to Los Angeles and cutting back on extras like free food.

In its submission on its proposed transaction with Qatar, Virgin said the better question was not how many jobs could be lost as a result of the wet lease, but instead “how many new jobs would be forgone,” if it wasn’t able to expand its international network through the proposed deal.

Virgin has fired shots at Qantas in an ACCC submission. Picture: Jenny Evans/Getty Images

As it stands, high-yielding corporate customers are more attracted to Qantas domestically, in part because its expansive Qantas Frequent Flyer program allows them to earn points which can then be used for international leisure travel.

The proposed deal will “strengthen the attractiveness of Virgin’s existing services, increase feeder traffic on Virgin’s existing network and increase the potential for additional frequencies and new routes,” Virgin said in its submission.

Virgin is leaving nothing to chance in trying to have its deal approved by the ACCC and the Foreign Investment Review Board after the Albanese government’s shock decision to block Qatar from increasing flights to Australia in 2023, despite record high airfares and a limited competition at the time.

Various Labor government ministers pointed to a variety of different reasons for the decision, and a senate inquiry was held to determine whether it was actually linked to the close relationship between prime minister Anthony Albanese and then-Qantas boss Alan Joyce.

Before the deal with codeshare partner Qatar was blocked, Virgin boss Jayne Hrdlicka had been so comfortable it would proceed, she did not press the Prime Minister on the issue.

Now the airline is clearly more aware of the power of its bigger rival in Canberra and pointed out in its submission the Flying Kangaroo not only has a wet lease deal with Finnair, it also has a profit sharing agreement on certain routes with Emirates.

“Qantas’ submission that Virgin Australia will have no incentive to develop its own international services using Australian crew … and will be able to permanently use Qatari labour at the expense of Australian’ jobs is a remarkable assertion from a company with a well-established history of outsourcing Australian jobs overseas and over a decade of leaning heavily on its own alliance with Emirates.”

Qantas also faces a $100m-plus fine for illegally firing 1700 baggage handlers during the pandemic.

The ACCC is expected to hand down an interim authorisation next week, and a FIRB ruling could come by month’s end.