It seems Qatar Airways is splashing the cash again, the announcement that it intends to acquire a minority 25% equity stake in Virgin Australia from Bain Capital
The investment will be subject to the Australian Foreign Investment Review Board, as well as other regulators.
According to two groups, a deeper strategic relationship between Virgin Australia and Qatar Airways will drive increased competition in Australian aviation. This will ensure Australian consumers have access to even better value airfares and greater choice. Domestic competition in Australia is dependent on Virgin Australia thriving through the inevitable ups and downs of aviation.
The minority stake also serves as a cornerstone investment ahead of an anticipated return of Virgin Australia into public ownership and the opportunity that would provide for Australians to share in Virgin Australia’s future.
Both Virgin Group and Queensland Investment Corporation (QIC) will retain shareholdings in Virgin Australia.
International Expansion
Subject to ACCC authorisation this cooperation will enable Virgin Australia to launch flights from Brisbane, Melbourne, Perth and Sydney to Doha, connecting seamlessly into Qatar Airways’ global network.
These extra flights will open up more than 100 new connecting itineraries across Europe, the Middle East and Africa for Australian travellers. The proposed wet lease services will begin in mid-2025.
In theory, this will allow Virgin Australia to assess the longer-term merits and viability of wide-body aircraft.
The agreement will also include an expanded codeshare and collaboration arrangement, to offer a greater range of international destinations with improved schedules and frequencies, increased earn and redemption opportunities for members of Velocity and Qatar Airways’ Privilege Club, and broader access to great value fares for leisure travellers, small and medium-sized enterprises, and corporate customers.
In Quotes
Virgin Australia Group CEO Jayne Hrdlicka said
“This partnership brings the missing piece to Virgin Australia’s longer-term strategy and is a huge vote of confidence in Australian aviation. Importantly, it will further strengthen Virgin Australia’s ability to compete over the long term, which will inevitably translate into more choice and even better value airfares for consumers as well as additional Australian aviation jobs,” Ms Hrdlicka said.
“Qatar Airways has been a valued codeshare partner of Virgin Australia since 2022. This investment by the world’s best airline will deepen an already strong partnership by bringing critical scale and the best industry expertise to support our long-term competitiveness and growth.
“This proposed investment is subject to regulatory approval. We do not take this for granted and have made submissions outlining the benefits of the transaction for Australian aviation, Australian travellers and the Australian economy.”
In regards to restarting long haul services under a wet lease, she adds:
“I am delighted that our closer relationship allows us to put our ‘toe in the water’ regarding long-haul international, as well as the ability to deepen other areas of existing cooperation, including between our respective loyalty programs and code sharing arrangements,” she said.
“Both airlines are thrilled by the opportunity to work together more closely, which will bring significant benefits to Australian travellers and the economy.
“I am super proud of the entire team at Virgin Australia. Together they have done a wonderful job getting Virgin Australia back into a healthy, long term competitive position that has attracted the world’s best airline as a prospective investor. Every member of our team has contributed to this terrific outcome,”
Qatar Airways Group CEO Eng. Badr Mohammed Al-Meer added:
“We are really pleased to be announcing our proposed strategic investment in Virgin Australia today. The alignment of our two airlines is significant, the relationships are deep, and we could not be more proud to bring even more great value and choice to all Australians. The investment further demonstrates our strategic alignment with Virgin Australia and our collective ambition to deliver the best possible service and value to Australian passengers,” he said.
“Not only that, we believe competition in aviation is a good thing and it helps raise the bar, ultimately benefiting customers. This agreement will also help support Australian jobs, businesses and the wider economy.”
Bain Capital Partner Mike Murphy concluded
“Virgin Australia plays a pivotal role in connecting Australians with each other, and with the world. Over the past four years, we’ve had the privilege of working alongside a team that has shown the dedication and tenacity needed to revitalise the airline. After a decade of losses resulting in administration, Virgin Australia has emerged as a strong and profitable company with an attractive market position, a loyal customer base, and a promising growth trajectory,”
“We are pleased to welcome Qatar Airways Group as a partner at this stage to build on Virgin Australia’s strong foundation.”
Why operate more routes, when you can buy access into the market?
Whilst slots and flight pairs may be limited to Australia, it seems that buying into another airline and helping them launch long-haul routes is a thing to bypass any slot regulations, whilst being able to launch local competition.
For Virgin Australia, this will be another attempt at long-haul routes (given that in previous incarnations, they operated Boeing 777-300ERs under the V Austraiala brand, as well as operating Airbus A330 aircraft internationally), with the airline made up of Boeing single-aisle aircraft currently.
It’s a way around the regulators while giving Qantas a lot to think about with its dominance of the long haul services out of Australia. Combined with the upcoming Western Sydney Airport (which is actively looking for tenants), it could be a win for the passenger.
This could be interesting to watch – especially if the competition regulators get involved… and how much they try to protect other carriers…
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