Qatar Airways announced today that it is purchasing a minority stake in Virgin Australia. The Doha based airline intends to purchase a 25% stake in the airline from owner Bain Capital.
Purchasing stakes in other airlines is nothing new for Qatar Airways, just over a month ago the carrier purchased a 25% stake in South Africa’s Airlink. While the Airlink investment was done to provide feed for Qatar Airways’ existing flights, there are more interesting items at stake as part of this transaction.
While the investment is intended to promote a deeper relationship between the two carriers (the airlines have had a partnership since 2022), this investment is really about one thing, long-haul flying.
Australia has protectionist policies in place for its airlines which limits the number of flights that foreign carriers can operate to and from the country. Currently, Australia limits flights from Qatar on foreign carriers to 28 weekly flights to Australia’s four main airports (Sydney (SYD), Melbourne (MEL), Brisbane (BNE), and Perth (PER)). As much as Qatar would like to, it can’t expand its flying past that. Here’s where the Virgin Australia partnership comes into play. Virgin Australia, as an Australian company, isn’t impacted by these restrictions.
As part of the investment, Virgin Australia plans to launch its own flights between Australia’s four main airports and Doha’s Hamad International Airport (DOH). However, there’s a small problem with this. Virgin Australia doesn’t have any long-haul aircraft. During the pandemic, the airline sold its fleet of Airbus A330 and Boeing 777 deciding instead to focus on an all-narrowbody fleet.
This is where things really get interesting. Virgin Atlantic is expected to operate these flights on a wet-lease basis with Qatar Airways. Essentially, Virgin Atlantic will market the flights and Qatar Airways will provide the planes and the crew.
With these flights feeding Qatar Airways’ superhub in Doha, the airline is essentially doubling its capacity to Australia using its own airplanes and crew. Still, if approved by regulators, the double daily flights between Virgin Australia and Qatar Airways will still pale in comparison to the 168 weekly flights between Australia and the United Arab Emirates operated by non-Australian carriers. The vast majority of which are operated by Emirates.
Emirates has a joint venture with Qantas even though Qatar Airways and Qantas are both members of the OneWorld alliance. The Dubai based carrier has the ability to operate 7x more weekly flights between the middle east and Australia when compared to Qatar Airways.
Qatar is hoping that this new investment will allow them to expand their presence on the extremely valuable routes which will allow passengers the ability to travel on more than 100 new connecting itineraries across Europe, the Middle East and Africa. Virgin Australia Group’s Chief Executive Officer, Jayne Hrdlika, had this to say about the investment:
“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.”
It will be interesting to see if this investment runs into any snags with Australian regulators or if it is approved without issue. Based on the timeline reported by the two airlines, “Virgin Australia” flights between Australia and Doha would begin in mid-2025, pending regulatory approval.
Summary
Qatar Airways is taking a 25% stake in Virgin Atlantic. The Australian carrier, which is owned by Bain CApital, will begin long-haul flights between Australia’s four busiest airports and Qatar Airways’ Doha hub. This will allow Qatar Airways to essentially double its capacity to the country, if the purchase is approved by Australian regulators. For now, we just have to wait and see whether this purchase is approved.
(Images courtesy Qatar Airways)
