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‘Now is the right time’: Virgin and Qantas ink deals ahead of travel boom

By Jessica Yun
Updated

Australia’s two biggest airlines - Qantas and Virgin - are scrambling to ink deals and cement strategic partnerships as they look to ramp up their services ahead of a post-pandemic holiday boom.

Qantas on Tuesday announced that it had acquired a 51 per cent stake in online booking platform TripADeal, with its press conference coinciding with Virgin’s event at Sydney International Airport to celebrate its freshly sealed partnership with United Airlines.

Virgin chief executive Jayne Hrdlicka.

Virgin chief executive Jayne Hrdlicka.Credit: Brendon Thorne/Bloomberg

“We’re very confident about the future. We see Australians hungry to travel,” Virgin boss Jayne Hrdlicka told the Sydney Morning Herald and The Age, pointing to the strong return of the domestic market and “a lot of interest” in international trips.

Tuesday marked Virgin’s return to Sydney’s international departure board for the first time in two years, after a United Airline flight took off for San Francisco under the new partnership.

“We’re feeling really positive about the future and all that it brings in terms of opportunity,” Hrdlicka said.

Virgin’s new partnership with United Airlines comes just weeks after it announced a partnership with Qatar Airways earlier this month.

Hrdlicka indicated Virgin has more in the pipeline. “We have a big strategy. We’re not going to unveil it all today.”

Meanwhile, Qantas’ majority stake in TripADeal gives its frequent flyer members access to more than just flights by letting them use their Qantas points to book any holiday package available on TripADeal, encompassing multi-day tours, accommodation and flights from different airlines.

“Now is the right time to do this,” Qantas CEO Alan Joyce said of the TripADeal acquisition.

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“With most of the travel restrictions related to COVID being removed, we’re seeing massive growth in bookings, massive growth in planning, and massive growth in travel.”

TripADeal founders Norm Black (far left) and Richard Johnston (middle) with Qantas CEO Alan Joyce (second from left), Qantas Loyalty CEO Olivia Wirth (second from right) and Ben Gray, BGH Capital (far right).

TripADeal founders Norm Black (far left) and Richard Johnston (middle) with Qantas CEO Alan Joyce (second from left), Qantas Loyalty CEO Olivia Wirth (second from right) and Ben Gray, BGH Capital (far right).Credit: Qantas/Brent Winstone

Frequent flyers will earn three points for every $1 spent with TripADeal, or can pay part of their holiday with points and the other part in cash.

Joyce said the deal, for an undisclosed sum, will give its loyalty members access to domestic and international holiday packages at a better price.

“The number one thing frequent flyers want to use their points for is travel,” he said.

The acquisition is the largest that Qantas Loyalty has ever done, and “an important one because it’s going to make a big difference to the business in the future,” Joyce added.

TripADeal co-founders Richard Johnston (left) and Norm Black at Byron Bay.

TripADeal co-founders Richard Johnston (left) and Norm Black at Byron Bay. Credit: Mark Lane

TripADeal was founded in Byron Bay in 2011 by Norm Black and Richard Johnston and currently employs about 100 people. The founders sold a controlling stake to private equity firm BGH Capital in 2020.

Speaking to the Herald and The Age, Black said the deal’s size was “up there”.

“The numbers are very significant,” he said.

The online holiday booking platform is on track to have its largest month in its 11-year history, he added.

“We’re looking to exceed $21 million in turnover this month – before the Qantas deal.”

Qantas Loyalty CEO Olivia Wirth, who made the announcement alongside Joyce, said that travel bookings were returning to pre-COVID levels.

“We are seeing a boom in the travel industry,” Wirth said. “We do expect that there’ll be significant growth.”

Qantas Loyalty chief executive Olivia Wirth says travel bookings are returning to pre-COVID levels. 

Qantas Loyalty chief executive Olivia Wirth says travel bookings are returning to pre-COVID levels. Credit: Bloomberg

Qantas aims to treble TripADeal’s revenue within the next few years through the partnership, Joyce said.

The deal also provides options for Qantas to purchase the remaining 49 per cent it doesn’t yet own of TripADeal in four years’ time.

The acquisition is expected to deliver growth on top of the previously targeted $500 million to 600 million in expected underlying earnings before interest and tax (EBIT) by the 2024 financial year.

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Original URL: https://www.watoday.com.au/link/follow-20170101-p5anyb