VIRGIN AUSTRALIA: Treasurer greenlights QATAR Airways 25% stake. Wet lease agreement to go ahead.

In a significant move for Australia’s aviation sector, Australian Federal Treasurer Jim Chalmers has approved Qatar Airways’ purchase of a 25% stake in Virgin Australia. The approval is almost the last step in the process for Virgin Australia to operate Qatar aircraft under a wet lease agreement, beginning in June 2025.

What the 25% stake Involves

The arrangement will see Virgin Australia fly Qatar Airways’ aircraft, pilots and crew under a wet-lease agreement for the next five years.

“It will increase Virgin Australia’s capacity on key international routes and provides a long-term pathway for the airline to operate its own long-haul flights.”

Jom Chalmers, Treasurer

Support from industry

The partnership has support from stakeholders, including tourism operators, airports, and unions. However, the agreement is contingent on commitments, including ensuring Australian labour is utilised for the airline’s operations, board representation, and protection of customer data.

Virgin’s owners, Bain Capital, had originally planned to appoint Paul Jones, a former Qantas executive, as CEO. Opposition from the Transport Workers’ Union led to the decision being scrapped. The union’s objection stemmed from Jones’ involvement in the controversial sacking of 1,700 ground workers while at Qantas.

Pilots and cabin crew training program

Virgin Australia and Qatar Airways have committed to a structured staff secondment program. Starting in 2025, 20 pilots and 40 cabin crew members will be sent to Doha for long-haul flying experience. At least 60 positions will be created in Australia for local employees.

Exploring dry lease options

After three years in the partnership, both airlines have agreed to explore the option of ‘dry leasing’ aircraft, that is, renting the planes without the crew. Importantly, any future dry lease arrangements will utilise Australian-based labour in accordance with commitments made to the unions.

Broader economic impacts

The deal will have wider economic benefits for Australia. It will create more jobs, support the tourism industry, and enhance Australia’s position as a key travel destination in the region.

2PAXfly Takeout

The approval of Qatar Airways’ 25% stake in Virgin Australia signals a significant shift in the airline industry, bringing new opportunities for passengers and workers alike.

The deal to make Virgin Australia a long-haul airline again requires approval by the Australian Competition and Consumer Commission (ACCC). They have demonstrated their intention to approve, subject to any successful last-minute objections.

Adding a new competitor to international flying should place some downward pressure on airfares. Qatar has circumvented the previous rejection of their application to double flights to Australia.

At last, Qantas has a home-grown competitor. Prior to the pandemic and Virgin Australia going into administration, it had a fleet of Boeing 777s. Virgin Australia also had a very good international product flying predominantly to the USA. In the process of restructuring and for efficiency of recovery, Bain Capital got rid of those aircraft. That brought to an end its international long-haul ability.

Finally, Qatar Airways gets its revenge on OneWorld partner Qantas for choosing Emirates as iots predominant international partner.

Qatar, despite controversy, is still one of my favourite airlines to travel on, so maybe I will need to reconsider my loyalty to Qantas.