Qatar Airways unveiled a bid to take a 25 percent stake in troubled airline Virgin Australia on Tuesday, a deal that could shake up Australia’s Qantas-dominated market.
The airlines, along with Virgin owner Bain Capital, announced details of the long-rumoured agreement before markets opened in Sydney.
Under the plan, Qatar would take a minority stake in Virgin for an undisclosed sum.
The firms said it would spell more direct flights from Brisbane, Melbourne, Perth, and Sydney to Doha, which would better link Australia with Europe and elsewhere.
That could significantly rebalance Australia’s air travel market, which is currently dominated by Qantas, a pseudo-flag carrier beset by allegations of price gouging and deliberate overbooking.
“This will ensure Australian consumers have access to even better value airfares and greater choice,” the companies said in a joint statement.
The deal could also pave the way for Virgin to relist on the stock market. However, it will be subject to regulatory approval and fierce political debate.
Virgin Australia started bankruptcy proceedings at its financial nadir in 2020, laying off hundreds of staff as the Covid-19 outbreak wrought havoc on international travel.
US private equity giant Bain Capital came to the airline’s rescue later that year after the Australian government refused to bail out the majority foreign-owned company.
Qantas would have assumed a virtual monopoly over many Australian routes if its competitor went under.
Political clout
Qatar Airways has been looking for ways to increase its foothold in the Australian market.
Rival Qantas — along with its low-cost brand Jetstar — has a more than 61 percent share of the domestic air market and strong political clout.
In 2023, Qatar launched a bid to put on 21 extra international flights to and from Australia each week.
The Australian government snubbed that request, citing a 2020 strip search scandal at Doha Airport as a “factor”.
Qatari authorities pulled women off 10 planes at Doha Airport in 2020 and forced them to take invasive gynaecological exams, a move that sparked international outrage.
Three Australian women lodged legal action against Qatar Airways following the ordeal, although the case was dismissed by an Australian court earlier this year.
Political opponents accused the government of trying to shield Australian carrier Qantas from competition despite its record profits, resulting in high fares for international flights.
Qatar Airways CEO Badr Mohammed Al-Meer said 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.”
