Under the newly approved deal, the gulf state carrier will get its hands on a 25 percent stake from American investment giant Bain Capital.
Australian Treasurer Jim Chalmer and the Australian Foreign Investment Review Board have announced their approval of Qatar Airways’ (QA) purchase of 25% in Virgin Australia (VA) from U.S. private equity giant Bain Capital.
According to Chalmers and aviation experts, the new agreement will boost competition in Australia’s aviation atmosphere, benefitting local travelers through access to more flights.
“My decision aligns with the advice of the Foreign Investment Review Board that this proposal is consistent with the national interest,” Chalmers said in a statement.
Chalmers is in a position to cancel any foreign investments should they pose a risk to Australia’s national security.
“I have approved this proposal subject to legally enforceable conditions that ensure Australian representation on Virgin’s board and protection of its customer data,” he added.
VA chief Jayne Hrdlicka said the deal ushers in a “new era” for the Australian airline.
“Qatar Airways’ investment is a huge vote of confidence in our business and Australian aviation more broadly. It sets us up for long-term success and adds fuel to our bold transformation agenda,” Hrdlicka said in a statement.
She added that the deal would “support continued growth in line with the market domestically, improve our ability to compete for key segments of the market and add momentum to our margin ambitions”.
Qatar Airways Group CEO Badr Al-Meer said the deal was a “significant step towards solidifying the strong and enduring relationship that continues to evolve between Qatar Airways Group and Virgin Australia,” adding that the latest development is 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,” Al-Meer said in a joint statement with VA.
The gulf state airline first proposed to purchase the minority stake in October following the rejection of a bid to increase its national airline’s flights in major Australian cities by the Labor government, citing “national interests” as the reason.
QA had sought for an additional 28 weekly flights.
On February 18, the Australian Competition and Consumer Commission (ACCC) gave the green light for a wet lease agreement between QA and VA.
This opened up opportunities for both airlines to add 28 weekly return flights between Doha and major Australian cities, including Brisbane, Melbourne, Perth, and Sydney.
“We consider that the proposed cooperative conduct would likely result in several public benefits including providing enhanced products and services for air travellers which would include increased choice of international flights, with additional connectivity, convenience and loyalty programme benefits,” Australia’s competition watchdog Commissioner Anna Brakey said in a statement.
A wet lease agreement allows one airline, the lessor, to supply an aircraft – along with its crew, maintenance services, and insurance – to another airline or a business brokering air travel, known as the lessee.
Under the proposed wet leasing arrangement, VA will be able to operate international long-haul flights on Qatar’s twin-aisle aircrafts starting as early as June, creating more pathways for Australian passengers to Europe, Africa and the Middle East for better value.
VA-QA flights have been on sale since December 2024.
Australian aviation giant Qantas boasts an international flying partnership with UAE’s Emirates. VA’s code-sharing agreement with Abu Dhabi-based Etihad is set to expire on June 1.
American investment company Bain Capital became VA’s saving grace when the private equity giant bought the airline for $2.45 billion in 2020 as VA grazed bankruptcy.
Bain Capital will continue to hold a majority stake in the Australian airline, alongside the Virgin Group and the Queensland Investment Corporation.
QA’ latest acquisition is expect to introduce a seismic shift in Australia’s domestic airline industry, allowing the Gulf airline more room in Australia’s aviation landscape against dominant Qantas. Airlines have been grasping for greater market share in Australia.
According to a 2024 report from the ACC on Domestic airline competition, Qantas, and its budget subsidiary Jetstar, held a combined 63% of passenger market share as of June 2024. VA held 32%.
VA will now wait to hear decision from the International Air Services Commission (IASC) on the allocation of air rights for services between Australia and Qatar.
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