Election looming as potential obstacle for Virgin-Qatar’s European summer flights

Pressure is mounting on Treasurer Jim Chalmers to rule on Qatar Airways’ investment in Virgin Australia before the federal election.

The federal election is looming as a potential stumbling block for Virgin Australia’s new international flights by Qatar Airways, which are still awaiting final ­approval.

In the event an election occurs before the decision is delivered by Jim Chalmers, it could disrupt plans to begin flights from Sydney, Brisbane and Perth to Doha in June, forcing Virgin to refund customers or find alternative flights.

Various industry groups and Coalition transport spokeswoman Bridget McKenzie have urged the Treasurer to expedite the matter to provide certainty.

It’s coming up to three months since Virgin Australia announced the deeper partnership with Qatar, centred on the Gulf carrier taking a 25 per cent stake in the airline.

The airline said the investment was key to “unlocking new areas of co-operation” between the carriers, including wet lease flights using Qatar aircraft and crew, sold and marketed as Virgin Australia services. But first the deal must be approved by the Foreign Investment Review Board and ultimately the treasurer, who can take anything from 30 days to seven months to reach a decision.

Senator McKenzie said the Coalition hoped the FIRB’s decision would be made expedi­tiously to allow the recommen­dation to go to Dr Chalmers for consideration as soon as possible.

“In the meantime, the Coalition is steadfast in our commitment to support more compe­tition in our skies in order to keep downward pressure on rfares and more choice or Australian travellers,” Senator McKenzie said.

Australian Airports Association chief executive Simon Westaway said the ball was in the regulator’s court, but members were “watching sharply”.

He said it was in the national interest that the arrangement was approved in a timely fashion.

“The Australian Open has finished, Australia Day has come and gone, we’re back at work, we’ve had record volumes of (outbound) travellers through our airport gateways over the holiday season and this is a very important forward development in terms of us continuing to evolve our international air market in what is a very competitive global market these days,” Mr Westaway said.

“Australia needs to remain competitive and we need to grow and evolve access, and this is another way of doing that.”

Virgin Australia is sweating on regulatory approval for a 25 per cent investment by Qatar, which will unlock new levels of cooperation including new flights. Picture: Virgin Australia

Australian Transport Industry Association CEO Dean Long was also keen to see travellers given certainty that the flights would go ahead in the northern summer as planned.

As well as the FIRB, Virgin and Qatar were sweating on the Australian Competition & Consumer Commission’s draft determination, due in coming weeks.

“We’d be hoping that given the analysis already done by the ACCC and the overwhelming support from industry that this will lead to better consumer and connectivity outcomes, that the FIRB and the Treasurer would be seeking to expedite the application assessment and have it completed by the election,” Mr Long said.

“This will ensure Australians can travel for the European summer and importantly allow Australia’s inbound industry to have more connectivity to assist with their growth, which is still lagging significantly behind 2019 levels.”

A spokesman for Dr Chalmers said the government did not comment on the application of the foreign investment framework to specific cases.

Virgin Australia was granted an “interim authorisation” by the ACCC in November so as to begin selling seats on the new flights to be operated by Qatar’s 777s.

As part of the authorisation, Virgin and Qatar were required to sign a court-enforceable undertaking to refund passengers in the event the services did not receive final approval.

It was noted by the ACCC that if for any reason Virgin and Qatar could not begin the new services in June, it would not be financially viable to start them until December due to higher seasonal demand.

Virgin Australia declined to comment on the pace of the regulatory approvals, but said it remained optimistic the flights would be cleared for take-off ahead of the June starting date.

The first Sydney-Doha service was scheduled for June 12, followed by Brisbane-Doha a week later, and Perth-Doha from June 26. Melbourne-Doha was expected to begin in December.

Qantas has previously indicated it has no objection to Qatar’s investment in Virgin Australia, which is owned by US private ­equity firm Bain Capital.

However, Qantas has raised concerns about the wet lease ­arrangement and the apparent circumvention of bilateral air service agreements.

In 2023, Qatar Airways was denied more flights into Australia by the Albanese government because the flights were “not in the national interest”.

The proposed new arrangement would mean Qatar could operate those flights using Virgin Australia’s air rights.

Emirates president Tim Clark said there “was nothing wrong with competition”, which was “good for the consumer”, but suggested the use of Qatar aircraft and crew “for perpetuity was a strange one”.

“The Australian government is probably going through various thoughts about how this is going to work,” said Sir Tim, whose airline competes fiercely with Qatar.

“In the whole sort of architecture of bilateral agreements, this would never have been allowed for any period of time.”

It is believed Virgin Australia CEO Jayne Hrdlicka is waiting for the deal to be finalised before departing the airline. An announcement in February last year said Ms Hrdlicka had decided “to transition from the CEO role”.

Despite a shortlist of candidates to replace her, Ms Hrdlicka has remained in charge of the airline.

Originally published as Election looming as potential obstacle for Virgin-Qatar’s European summer flights