The Australian Competition and Consumer Commission (ACCC) announced today that it backed the cooperation between Virgin Australia and Qatar Airways, which will allow them to engage in cooperative conduct under an integrated alliance for five years.
The two airlines are seeking authorization to engage in an integrated alliance where Virgin Australia, in partnership with Qatar Airways, will commence 28 new weekly return services between Doha and Perth, Brisbane, Sydney and Melbourne.
ACCC to make final decision after March 7
Under the proposed arrangements, Virgin Australia would use Qatar Airways’ aircraft and crew to operate the new services. This is known in the aviation industry as ‘wet lease’ arrangements.
“We consider that the proposed cooperative conduct would likely result in several public benefits including providing enhanced products and services for air travelers which would include increased choice of international flights, with additional connectivity, convenience and loyalty program benefits for consumers,” ACCC Commissioner Anna Brakey said.
The ACCC is now seeking feedback on its draft determination by March 7 before making a final decision, the regulator said.
“We consider that Virgin Australia is unlikely to commence operating long-haul international services between Australia and the Middle East on a stand-alone basis in the next five years. In those circumstances, we do not consider that there is likely to be a material detrimental impact on the Australian aviation workforce as a result of the conduct,” Brakey added.
Virgin Australia welcomed the ACCC’s decision, noting the flights were currently on sale. “Today’s ACCC announcement confirms their support for these services,” the carrier said.
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Qatar Airways awaits approval for 25 percent stake purchase in airline
Qatar Airways is still awaiting government approval for its purchase of a 25 percent stake in Virgin Australia from the U.S. private equity firm Bain Capital.
Virgin Australia is the biggest domestic rival to Qantas Airways, which has a partnership with Dubai-based Emirates. Qantas previously lobbied the government against Qatar Airways’ unsuccessful bid to fly additional services into Australia.
Qatar Airways Group’s 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. Bain Capital said last year that it was exploring an IPO of Virgin Australia shares, which it bought for $2.42 billion.
