(Posted 03rd October 2024)
The partnership represents a significant vote of confidence in Virgin Australia and Australian aviation;
Cements a deeper strategic partnership that will strengthen competition in Australia’s skies, creating more choice and better value for Australians;
Provides access to scale and synergy benefits, further strengthening Virgin Australia’s financial resilience and underpinning the company’s continued strategic growth;
Enables a measured entry into long-haul international flying by mid-2025, with significant flow on benefits for Australian travellers and the Australian economy;
Delivers additional consumer benefits, including increased earn and redemption opportunities between Velocity and Qatar Airways’ Privilege Club, as well as expanded code sharing arrangements and improved schedule and connectivity options; and
Unlocks the potential for new areas of co-operation, including on sustainability initiatives and western Sydney’s aviation ecosystem
The existing partnership between Virgin Australia and Qatar Airways will be strengthened following the announcement that Qatar Airways Group intends to acquire a minority 25% equity stake in Virgin Australia from Bain Capital (subject to FIRB approval). Qatar Airways is one of the world’s largest airlines and earlier this year was awarded the world’s best airline by Skytrax for the eighth time.
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. Qatar Airways Group’s strategic investment will provide access to the critical scale and expertise of a world leading global airline. 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.
The equity investment by Qatar Airways Group will unlock new areas of cooperation with Virgin Australia, all of which will help to drive additional consumer and economic benefits. 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, allowing Virgin Australia to assess the longer-term merits and viability of wide-body aircraft flying while providing Australians with greater local competition for their long-haul travel needs in the near-term.
The expanded codeshare and collaboration arrangement will provide access to 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.
The deepened partnership has the potential to underpin significant jobs and economic growth, not just in Virgin Australia but across both the broader aviation and tourism sectors in Australia. An important area of future focus is sustainability, including the development of Sustainable Aviation Fuel. The partnership also comes at a great time to explore opportunities as the new Western Sydney Airport and its economic ecosystem are developed.
Qatar Airways Group Chief Executive Officer, Engr. Badr Mohammed Al-Meer said:“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. 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.”
Virgin Australia Group Chief Executive Officer, Ms. Jayne Hrdlika, added: “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. 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.”
Reflecting on the new proposed long-haul services between Australia and Doha, Ms. Hrdlicka noted that they were estimated to generate an economic benefit of ~A$3bn to the Australian economy through incremental visitor flows over the next five years. Additional benefits will flow from increased freight capacity, supporting Australia’s high-value exports to markets such as the Middle East and Europe.
She continued: “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.”
Ms. Hrdlicka noted that she was particularly excited by the potential to expand the two airlines’ relationship into new areas such as sustainability and development of the western Sydney aviation ecosystem, including broader jobs and training opportunities.
She further stated: “Sustainable Aviation Fuel will play a critical role in aviation’s long-term decarbonisation effort. Virgin Australia has been an active participant in the Federal Government’s Jet Zero Council, and we expect our partnership with Qatar Airways to support SAF opportunities in a manner consistent with the Federal Government’s Future Made in Australia agenda. 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.”
Bain Capital Partner, Mr. Mike Murphy also commented, saying: “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.”
