Australia will allow Qatar Airways' acquisition of a 25 percent stake in troubled airline Virgin Australia, a senior government minister said Thursday, injecting foreign competition into the country's Qantas-dominated aviation sector.
Qatar will pay an undisclosed sum to acquire a minority stake in Virgin Australia after the deal was blessed by Australia's competition watchdog. Virgin Australia said in a statement,
Australian travellers are set to benefit after a deeper strategic partnership between Virgin Australia and Qatar Airways Group was given the green light by the Australian Government.
The federal government's green light to Qatar Airways' acquisition of stake in Virgin Australia was visible following cross-government consultation by Treasury, engaging the aviation industry, unions and other relevant stakeholders.
"It is expected to strengthen competition in the aviation sector," Treasurer Jim Chalmers said in a statement.
Virgin Australia added further,
"Qatar Airways Group’s minority 25 per cent investment in Virgin Australia has now received Foreign Investment Review Board (FIRB) approval following the Federal Treasurer’s announcement today."
"This follows the Australian Competition and Consumer Commission’s (ACCC) Draft Determination on 18 February indicating its intention to authorise the airlines’ integrated alliance, with final approval expected in March/April 2025. Together, they help open the door to the airline’s return to long-haul international flying."
The airlines, along with Virgin owner Bain Capital, announced the long-rumoured proposal in October last year. Virgin Australia said:
Qatar Airways Group’s 25 per cent stake will provide Virgin Australia with access to the scale and expertise of a world-leading global airline, strengthening its ability to compete domestically and internationally and driving increased competition in Australian aviation.
Bain Capital, Virgin Group, and Queensland Investment Corporation will retain shareholdings in Virgin Australia.
They pledged to run more direct flights from Australia to Doha, stoking competition on expensive long-haul routes long dominated by Qantas. The agreement will also include a secondment program, which will place 20 pilots and 40 cabin crew in Doha, to gain long-haul flying experience in 2025, Chalmers said, and there would be at least 60 Australia-based backfill positions.
Qantas -- along with its low-cost brand Jetstar -- has a more than 61 percent share of the Australian market and boasts strong political clout.
Virgin Australia started bankruptcy proceedings in 2020, laying off hundreds of staff as the Covid-19 outbreak grounded international flights.
US private equity giant Bain Capital came to the airline's rescue after the Australian government refused to bail out the majority foreign-owned company.
Qatar Airways has been looking to increase its foothold in the Australian market. In 2023, Qatar launched a bid to put on 21 extra international flights to and from Australia each week.
But the Australian government snubbed that request, citing a 2020 strip search scandal at Doha Airport as a "factor".Women were pulled off 10 Qatar Airways flights at Doha International Airport (DOH) and forced to take invasive gynaecological exams after a baby was abandoned in an airport bathroom.
Three Australian women lodged legal action against Qatar Airways following the ordeal, although the case was eventually dismissed.
Qatar Airways chief executive Badr Mohammed Al-Meer said last year the proposed Qatar-Virgin tie-up would be good for Australians.
"We believe competition in aviation is a good thing and it helps raise the bar, ultimately benefiting customers," he said. "This agreement will also help support Australian jobs, businesses and the wider economy."
“This latest development is a significant step towards solidifying the strong and enduring relationship that continues to evolve between Qatar Airways Group and Virgin Australia. It is also a huge boost to our shared ambition to create even greater choice and value for all Australian passengers, with healthy competition and world-class service at the very core of our collective offering.
“We are confident in our ability to deliver an alliance between our two airlines that will provide immense benefit to customers, Australian businesses, Australian jobs and the wider economy.”
Virgin Australia has entered a "new era", CEO Jayne Hrdlicka said, after the federal government approved a deal it says will benefit Australian travellers.
Bain Capital Partner Mike Murphy said:
“We’re delighted to welcome Qatar Airways Group as a partner in Virgin Australia.
“Virgin Australia has emerged as a strong and profitable company with an attractive market position, a loyal customer base, and an exciting growth trajectory. Now, through our partnership with Qatar Airways, we’re unlocking new areas of cooperation with one of the world’s leading airlines.
“Bain Capital remains the majority shareholder and is committed to Virgin Australia’s long-term success.”
Virgin Australia and Qatar Airways signed a Memorandum of Understanding (MoU) to collaborate on a range of sustainability initiatives in October 2024. Areas of focus under the MoU include aiming to advance the use of Sustainable Aviation Fuel, environmental management including waste and energy management, sustainable procurement, and aviation workforce development.
Virgin Australia now awaits a decision from the International Air Services Commission (IASC) on what is an uncontested allocation of air rights for services between Australia and Qatar, due to commence in June.
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