Australian travellers could end up with cheaper airfares after Qatar Airways’ 25 per cent stake in Virgin Australia was approved federal government.

The proposal, announced on Thursday, is expected to strengthen competition, create more jobs, open new routes, and could provide Virgin Australia the opportunity to operate its own long-haul flights.

Virgin Australia chief executive Jayne Hrdlicka – who joined the airline under Bain Capital in 2020, but will soon be stepping down – described it as “a new era” for the airline.

“Qatar Airways’ investment is a huge vote of confidence in our business and Australian aviation more broadly,” she said in a statement.

“It sets us up for long-term success and adds fuel to our bold transformation agenda.”

Ms Hrdlicka said domestically, Virgin Australia was “competing well” and that being backed by one of the world’s largest airlines would improve the airline’s ability to “compete for key segments of the market and add momentum to our margin ambitions”.

In 2023, Transport Minister Catherine King blocked Qatar Airways from adding extra flights to Australia, citing the “national interest”.

But on Thursday, Treasurer Jim Chalmers approved the deal and was selling its benefits to Australians.

He said the investment would be conditional on maintaining Australian representation on Virgin’s board and protection of its customer data, but that it was “expected to strengthen competition in the aviation sector”.

“It will increase Virgin Australia’s capacity on key international routes and provides a long-term pathway for the airline to operate its own long-haul flights,” he said.

The federal government’s decision follows the Australian Competition and Consumer Commission (ACCC) draft decision this month that found the flights would benefit consumers and enhance competition.

On Thursday Ms King noted the Treasurer had made the decision and that “as part of that there’s conditions on making sure that there is Australian presence on the board” and that “there’s opportunities for training pilots and cabin crew”.

“It’s really important that we continue – as part of having Australian aviation – good, strong investment in jobs,” Ms King said.

How soon Virgin’s flights to Doha will operate 

Under a so-called wet lease agreement, Virgin Australia will be able to lease both Qatar Airways’ aircraft and crew.

The deal will mean 28 new weekly return services between Qatar’s capital Doha and Perth, Brisbane, Sydney and Melbourne.

Flights between Sydney, Brisbane and Perth to Doha are expected to begin in June, with those between Melbourne and Doha set to start in December.

The agreement will also include a secondment program, which will place 20 pilots and 40 cabin crew in Doha in 2025, to gain long-haul flying experience. There will be at least 60 Australia-based backfill positions created.

Qatar Airways chief executive Badr Mohammed Al-Meer described the deal as “a huge boost to our shared ambition to create even greater choice and value for all Australian passengers”.

New Virgin CEO and board appointments expected, Qantas CEO welcomes competition

Bain Capital — which rescued Virgin Australia out of administration in 2020 during the COVID-19 pandemic — will need to appoint a new chief executive after Ms Hrdlicka announced in early February she would be stepping down.

While Virgin Australia’s board is currently dominated by executives from Bain, new appointments are expected.

Bain Capital partner Mike Murphy said since then the airline has emerged as “a strong and profitable company with an attractive market position, a loyal customer base, and an exciting growth trajectory”.

“Bain Capital remains the majority shareholder and is committed to Virgin Australia’s long-term success.”

Qantas chief executive Vanessa Hudson said she welcomed the extra competition.

The airline had come under fire at parliamentary hearings over lobbying the federal government to block the deal in 2023.

“We said we weren’t going to oppose the result, so from the outset that’s been our position and the outcome today was expected,” Ms Hudson told reporters this morning in Melbourne during a press conference on the company’s latest results.

She said the government’s guidance around the wet lease was “a balanced outcome”.

Tourism industry, unions say deal will make travel ‘more affordable’, create jobs

Flight Centre corporate global COO Melissa Elf said the move would bring about “stronger competition and capacity, in turn bolstering choice and affordability in travel for Aussie corporates and holiday-makers”.

“The approval of the deal will support the recovery of our international visitor economy, and strongly contribute to corporate travel recovery,” she said.

“Those extra flights will certainly have an impact on international travel out of Australia, particularly to Europe, which has generally been slower to return to pre-pandemic capacity, and has seen higher airfares as a result.”

The Transport Workers Union also welcomed the deal based on Virgin’s commitments to TWU members regarding ongoing consultation.

TWU national secretary Michael Kaine said in statement the union had “ongoing concerns over labour standards, given Qatar Airways’ track record on human rights and worker abuses”.

But he added that “there’s a huge potential here to build Virgin’s international footprint and ensure opportunities for workers”.

“With a question mark still around CEO Jayne Hrdlicka’s successor, it’s critical Bain and Virgin urgently accelerates its commitments to ongoing consultation with workers,” he said.

The deal will now be subject to International Air Services Commission (IASC) approval.