A year is a long time in politics, and long enough for the federal government to learn that Australia’s one-time attachment to its national carrier has long passed.

This time last year, Qatar Airways was officially knocked back from extra flights into the country “in the national interest” after some deftly handled persuasion from Qantas’s then-hierarchy.

It was a decision that was never properly explained, resulted in a parliamentary inquiry and left the travelling public bewildered. 

But it highlighted the Flying Kangaroo’s slick lobbying operation in the halls of power and the cosy relationship between the airline and Canberra, via its Chairman’s Lounge.

Qatar Airways, the Middle Eastern carrier, now has exacted its revenge with a deal that will increase competition and possibly result in cheaper fares.

For months, it has been negotiating to take a 25 per cent interest in Virgin Australia – the carrier that unlike Qantas was allowed to collapse during the pandemic – with its owners, American private equity group Bain Capital.

Details of the deal have yet to be disclosed, but it comes after Bain last year failed to drum up enough interest from investors to float Virgin on the Australian Securities Exchange.

Will regulators agree?

In some ways, it’s a Back to the Future deal that will make it difficult for regulatory authorities to refuse.

For more than a decade before its collapse, Virgin Australia was controlled by major international carriers, with only a tiny number of shares owned by retail investors trading on the ASX.

Singapore Airlines, Etihad and two Chinese carriers were the majority owners in the operation when it was grounded by the pandemic. Years earlier, Air New Zealand held a major stake.

Given its prior ownership structure, it would appear unlikely the Foreign Investment Review Board could establish a logical argument to refuse the deal.

Even less likely, following the uproar last year, that Treasurer Jim Chalmers would intervene.

“We do want the airline sector to be stronger and more competitive,” he told reporters on Tuesday.

“We know across the economy, not just in the airline sector, that foreign investment can be in our national interest.

“My job, and the Foreign Investment Review Board’s job, is to determine the national interest and make decisions consistent with it.”

Qantas dominates Australian skies, particularly with more than 60 per cent of the domestic market and Virgin holding around 35 per cent, according to a report from the Australian Competition and Consumer Commission.

But those numbers pre-date the collapse of Regional Express, and so would now be marginally higher.

What’s in it for Qatar?

The obvious win for the Middle East carrier is that it will be able to skirt the rules regarding permission for landing rights.

Virgin Australia abandoned long haul flights when it emerged from administration, concentrating on the domestic market and a smattering of short haul international routes to holiday destinations, such as Bali and Fiji.

Under this new arrangement with Qatar, it will be able to launch services to Doha and then into Europe and Africa with aircraft supplied and crewed by Qatar Airways.

Qatar will also gain access to Virgin’s robust domestic network for the passengers it flies into the country.

While both Singapore Airlines and Etihad have access to the domestic operations via the code sharing agreements they have with Virgin, an owner obviously holds more clout.

Whether this deal is the precursor to further such ownership deals with international carriers remains to be seen — but it may be a logical way for Bain to sell down its holdings and return Virgin to an ownership structure reminiscent of pre-pandemic days.

How has Qantas reacted?

This hasn’t come as a bolt from the blue for Qantas. Speculation has been rife for the past four months that a deal with Qatar was imminent.

Qantas shares dropped 2.9 per cent to $7.21, slightly down from their pre-pandemic highs of $7.35 so it hasn’t exactly caused a panic on the stock exchange.

Greater competition on international flights, however, would be expected to bite into Qantas earnings.

But the Australian airline has bigger problems to deal with.

While it has a legitimate complaint that as a commercial operation, it struggles to compete with state-owned airlines like Qatar, one of its biggest challenges is the age of its fleet.

Under Alan Joyce, little was invested in fleet upgrades as he sought to maximise profits — and his bonus.

That responsibility now falls on his replacement, Vanessa Hudson, who has been forced to confront the reputational damage inflicted upon the operation.

But Qatar Airways isn’t the only state-owned airline. Singapore Airlines and Etihad also are government-owned.

And let’s not forget, Qantas’s main international partner is Emirates, which also is a government-owned airline.