Qatar Airways plans to acquire a 25% minority stake in Virgin Australia, which is subject to approval by the Australian Competition and Consumer Commission (ACCC). According to a joint application by Qatar Airways and Virgin Australia to the ACCC, the partnership between the two airlines will not only strengthen Qatar Airways’ market position in Australia, but will also establish an exclusive codeshare and interline agreement between both companies.

In concrete terms, this means that Virgin Australia will not operate any future codeshare flights with any other airline in the Middle East, Europe or Africa, except with Qatar Airways. This exclusive partnership would significantly weaken Etihad Airways, as it currently benefits from the codeshare agreement with Virgin Australia to transport passengers to and from Australia. If the plans go ahead as proposed, it would be a major blow to the Abu Dhabi-based airline, as it would lose its only Australian codeshare agreement.

Impact on Etihad Airways

Etihad Airways, which like Qatar Airways originates from the Middle East, has used its partnership with Virgin Australia in recent years to strengthen its presence in the Australian market. Codeshare agreements give airlines the opportunity to offer their passengers a wider range and more connections without having to operate additional flights themselves. For Etihad, the partnership with Virgin Australia means important access to one of the most important aviation markets in the world.

However, with the potential acquisition of shares by Qatar Airways, Etihad would no longer have access to Virgin Australia’s connections, which would significantly weaken the company’s position in the Australian market. Many passengers who have previously booked flights through Etihad could switch to Qatar Airways instead, as its exclusive partnership with Virgin Australia makes it more attractive.

Qatar Airways on the rise

For Qatar Airways, however, this deal is a strategic triumph. By acquiring a stake in Virgin Australia and entering into an exclusive partnership, the airline not only secures greater access to the Australian market, but could also significantly weaken competition from the Middle East, particularly Etihad Airways. The planned exclusive interline and codeshare agreement will see Qatar Airways become Virgin Australia’s sole partner in the Middle East. This means that passengers wishing to travel from Australia to the Middle East, Europe or Africa will be increasingly dependent on Qatar Airways’ connections.

Qatar Airways will also be able to continue to maintain its relationship with Qantas as both airlines are members of the Oneworld alliance. The proposal submitted to the ACCC also allows both Virgin Australia and Qatar Airways to become members of the Star Alliance or SkyTeam, while Virgin Australia could also join the Oneworld alliance. This flexibility could provide both airlines with additional strategic options.

Impact on long-distance travel in Australia

Analysts have already begun to speculate on the potential impact of this deal on long-haul air travel in Australia. Analysis by Analytic Flying, cited by Australian Aviation, suggests that many passengers who previously booked flights with Etihad Airways could switch to Qatar Airways as a result of the new partnership. This could affect competition on long-haul routes to Europe and the Middle East and potentially change the prices of flights on these routes.

Virgin Australia plans to operate daily return flights between Brisbane, Melbourne, Perth, Sydney and Doha, using Qatar Airways’ capacity. These flights are currently scheduled to be operated using Boeing 777-300ER aircraft, indicating that Qatar Airways is looking to massively increase its presence on these busy routes.

A dynamic change in aviation

Qatar Airways’ proposed acquisition of 25% of Virgin Australia marks a major turning point in international aviation. While Qatar Airways continues to strengthen its position in Australia, Etihad Airways faces the challenge of finding alternative ways to maintain its connections to Australia. The coming months will be crucial as the ACCC makes its decision and airlines must adapt their future strategies.

For passengers, this potential deal will mean more connections and options between Australia and the Middle East, but also changes to the codeshare and interline agreements available. If the acquisition is approved, it could have a lasting impact on passenger flows on long-haul flights and increase competition among the major airlines in the Middle East.