Qantas says yes to 25% Qatari stake in Virgin Australia

Qantas is open to Qatar Airways’ 25% stake in Virgin Australia, fostering more competition as both airlines aim to strengthen their networks. Qantas’ focus remains on ultra-long-haul routes to Europe, bypassing the need for Gulf stopovers.

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TLDR:

• Qantas not opposed to Qatar stake

• Qatar seeks 25% of Virgin Australia

• Competition increases with one-stop flights


SYDNEY/DOHA (The Thursday Times) — Qantas Airways has publicly stated it holds no objection to Qatar Airways acquiring a 25% stake in Virgin Australia, the country’s second-largest airline. The announcement by Qantas’ Chair John Mullen comes as Qantas adapts its competitive strategy within the changing landscape of Australian aviation. Qatar Airways, known for its extensive network linking Australia to Europe via its Doha hub, has approached the federal government for approval on this investment. With support contingent on regulatory reviews, Qantas has noted that it welcomes foreign ownership in Australian airlines, provided that any transaction benefits Australian jobs, upholds national aviation standards, and addresses questions around leasing practices in the aviation sector.

Qatar’s investment ambitions

Qatar Airways has expressed interest in acquiring a 25% stake in Virgin Australia, positioning itself strategically in Australia’s airline market. This move comes amid Qatar Airways’ broader strategy to expand its footprint in major international routes, capitalising on its Doha hub. Virgin Australia has further requested permission to operate flights between Australia and Doha by mid-2025, using Qatar Airways aircraft and crew under a “wet leasing” arrangement. This strategy is seen as a potential way to enhance Virgin’s service offerings without an immediate fleet expansion, potentially benefitting both companies. However, local unions have voiced concerns, arguing that such arrangements could limit job creation within Australia.

Qantas’ competitive response

Qantas has not directly contested the Qatari investment but has emphasised the importance of assessing the deal’s broader impacts on Australian employment and aviation standards. This stance contrasts with Qantas’ previous position, where it lobbied against increased flights for Qatar Airways in Australia. Qantas CEO Vanessa Hudson has pointed to Qantas’ new investments in ultra-long-haul routes, such as the non-stop Perth-London and anticipated Sydney-London routes, as a way to offer direct alternatives to Qatar’s one-stop European connections. As the carrier invests in new aircraft, it seeks to maintain a competitive edge against Gulf-based carriers by reducing the need for stopovers.

Regulatory and competitive considerations

The proposed investment by Qatar Airways will undergo rigorous regulatory scrutiny, particularly regarding employment implications and Australia’s air service framework. Qantas has highlighted the importance of ensuring that foreign investments align with national interests, especially concerning job creation and adherence to leasing policies. Virgin Australia’s proposed use of “wet leasing” Qatar Airways’ planes has drawn criticism from labour unions, who argue that such moves sidestep local hiring. This regulatory review will likely consider the balance of foreign and domestic airline influence in Australia, especially as Qantas has also entered its own leasing deals with European carrier Finnair, which are set to transition to Qantas-operated aircraft by late next year.

Qantas’ shift towards non-stop routes

To maintain a competitive edge, Qantas is pushing forward with ultra-long-haul direct routes. Following the success of its non-stop Perth-London service, Qantas is preparing to launch Sydney-London flights, aiming to appeal to passengers who prefer non-stop travel. These direct connections are designed to provide an alternative to Gulf carriers’ one-stop options, particularly for routes between Australia and Europe. As Qantas incorporates new aircraft and transitions to longer routes, the airline seeks to capture market share from Gulf carriers, creating a competitive dynamic that may shape the future of Australian aviation.

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