Has Qantas met its match as Qatar Airways prepares to buy into Virgin Australia?

As Qatar Airways prepares to buy into Virgin Australia, Qantas faces the prospect of one of its fiercest-ever battles – so is the flying kangaroo up to the challenge?

It’s no secret Qantas is a ruthless competitor that will defend its territory fiercely – but has it met its match in Qatar Airways?

With the state-owned Gulf carrier buying into Virgin Australia, subject to government approval, Qantas could find itself facing competition on its most successful international routes.

It has more than 220 aircraft in its fleet and another 100 widebodies on order, so Qatar Airways is well placed for expansion in the years ahead.

Already Qatar and Virgin have indicated their planned marriage would result in more flights from Australia to Doha from mid 2025, using A350s or Boeing 777s and Qatari pilots and crew.

But there’s speculation Qatar will seek to operate other routes through its Australian partner, either by leasing aircraft to Virgin, or through other wet-lease arrangements, bypassing the need for bilateral air rights.

In a wet lease, one airline provides its own aircraft and crew to operate flights exclusively for another carrier, which sells tickets and markets the services.

Virgin Australia’s partnership with Qatar Airways is an unexpected turn of events for Qantas.

The concern for Qantas is that a Qatar-backed Virgin could provide competition on routes the flying kangaroo currently has to itself, including Perth-London, Perth-Paris, Perth-Rome and Melbourne-Dallas.

Before launching Perth-London in 2018, Qantas struggled to turn a profit from its international business due to fierce competition from airlines with a much lower cost base.

But the popularity of boarding a flight in Australia and disembarking in Britain vindicated then CEO Alan Joyce’s decision, with Qantas charging a premium for the privilege.

Suddenly Qantas international went from making a loss or a modest profit to become the second most profitable part of the business after domestic.

With the addition of more 16 hour-plus flights, Qantas is confident customers will be ready to embrace ultra-long range routes known as “Project Sunrise” when they take off in 2026.

Airbus is building specially configured A350-1000s for the 20-hour-plus services, connecting Australia’s eastern seaboard capitals with destinations such as London and New York.

And in a clear indication of Qantas’ concern about competition, Airbus has agreed to an “exclusivity” arrangement, ensuring no other airlines will get access to the same aircraft for an undisclosed period.

Whether that’s enough to ward off competitors is another matter, as Qatar Airways has previously demonstrated it’s not shy about jumping on to the routes it wants any way it can.

In 2019 the Gulf carrier was at the centre of a major stoush with US airlines, when plans to use its aircraft on US routes out of Italy were revealed.

Qatar Airways had taken a 49 per cent stake in financially troubled carrier Meridiana, which it renamed Air Italy and furnished with a fleet of A330s.

The move angered American, United and Delta airlines because Qatar had recently signed an agreement with the then Trump administration giving an undertaking to not operate flights into the US outside of the Gulf.

Qantas director Doug Parker, a former American Airlines CEO.

Then American Airlines chief executive Doug Parker led calls for Qatar’s plan to be blocked, calling it a “violation of the agreement”.

“(That agreement) was important, it gave the US government the comfort it needed to move forward only to find out that Qatar had gone and acquired a certificate of some bankrupt Italian airline,” Parker said in a 2019 interview.

“(Qatar) acquired a 49 per cent share but was clearly in control, and was going to take its aeroplanes and put them into that airline and have them fly from Europe to the US.”

Despite Qatar’s backing, Air Italy went into liquidation when the Covid-19 pandemic appeared in 2020, and stopped flying altogether.

Fortunately for Qantas, Parker is now on its board, bringing valuable experience for whatever may lie ahead on the Qatar-Virgin front.

Although Qantas is not expected to oppose Qatar’s stake in Virgin Australia, it’s believed to be pulling on the gloves over any wet lease arrangements – which will need ACCC approval. The watchdog is currently assessing an application for authorisation relating to the proposed alliance between Qatar and Virgin. Once that’s been validated, the application will be placed on the public register for comment.

Originally published as Has Qantas met its match as Qatar Airways prepares to buy into Virgin Australia?