Following months of speculation, we finally get confirmation. Qatar Airways is proposing to take a 25% stake in Virgin Australia. This comes as the two airlines propose a stronger partnership than they currently already have.
The plan also sees Virgin Australia proposing a return to long-haul international flights, operating flights from Brisbane, Melbourne, Perth and Sydney to Doha.
Qatar stake in Virgin Australia
As noted, Qatar is planning to take a 25% stake in Virgin Australia. The airlines are touting this as a “deeper strategic relationship” and are promoting the idea that it would “drive increased competition in Australian aviation”.
This is all subject to regulatory approval. The Qatar stake in Virgin Australia will need approval from the Foreign Investment Review Board (FIRB).
If the deal goes ahead, it will leave Bain owning 67.5% of Virgin Australia. The other minority shareholders are Virgin Group (5 per cent) and the Queensland government (2.5 per cent). These shareholdings will not change under this deal.
So, what does Bain plan to do with that 67.5%? There has been much talk about an IPO, and this appears to be firmly on the agenda. According to the press release, “the minority stake also serves as a cornerstone investment ahead of an anticipated return of Virgin Australia into public ownership”.
Doha Flights
As noted, the plan will see Virgin Australia operated services from Brisbane, Melbourne, Perth and Sydney to Doha (subject to regulatory approval). These services will operate under a wet-lease arrangement. Under this arrangement, Qatar Airways would supply both aircraft and crew to operate the services.
That said, Virgin Australia would likely manage other aspects of the flights. For example, Virgin Australia will sell the flights as though they were Virgin Australia flights. In addition, they may be responsible for some product choices, such as on-board dining. Of course, that remains to be seen.
Interestingly. Qatar has three former Virgin Australia 777s. They picked these up after Virgin Australia went into administration. It would be quite the irony if these were the aircraft to return. However, at this point, nothing has been said about the aircraft they are planning to use.
The current proposal is slated to begin in mid-2025 with the announcement seemingly leaving the door open to even more international flying. The Australia-Doha flights will allow “Virgin Australia to assess the longer-term merits and viability of wide-body aircraft flying”.
According to Virgin CEO Jayne Hrdlicka:
I am delighted that our closer relationship allows us to put our ‘toe in the water’ regarding long-haul international
Codeshare
Under the arrangement, there will be expanded codeshare arrangements. Under the plan, there will be “more than 100 new connecting itineraries across Europe, the Middle East and Africa for Australian travellers”.
Frequent Flyers
It is good news for frequent flyers as well. The expanded codeshare and collaboration will provide access to a greater range of international destinations with improved schedules and frequencies. There will be an increase in earn and redemption opportunities for members of Velocity and Privilege Club.
Final Words
As noted, this is all subject to regulatory approval which is by no means a given. It does, however, promise greater competition to the middle east, and onward to Europe and Africa.
