Australia has officially approved Qatar Airways’ acquisition of a 25 percent stake in Virgin Australia from US private equity firm Bain Capital, marking a significant shift in the competitive dynamics of the country’s aviation sector. This move poses a challenge to Qantas, the long-standing leader in Australian air travel.
Qatar Airways made its proposal to purchase the minority stake last October, following the Australian federal government’s refusal in 2023 to grant the airline additional flight services into major cities like Sydney, Melbourne, Brisbane, and Perth.
Treasurer Jim Chalmers highlighted that the deal is poised to enhance competition within the aviation market. “My decision aligns with the advice of the Foreign Investment Review Board that this proposal is consistent with the national interest,” he stated, adding that the approval includes legally enforceable conditions ensuring Australian representation on Virgin’s board and the protection of customer data.
Chalmers possesses the authority to cancel foreign investments deemed a risk to national security, underscoring the careful scrutiny of such deals.
Virgin Australia CEO Jayne Hrdlicka welcomed the development, suggesting it would bolster the airline’s growth and competitiveness in key market segments. “This will support continued growth in line with the market domestically and add momentum to our margin ambitions,” she said.
In a related development, Qantas announced an 11 percent surge in its first-half profits, driven by robust demand, and declared a special dividend—the first in over two decades. Qantas CEO Vanessa Hudson commented on the approval, reiterating the airline’s stance on competition: “We always said that we welcome competition… The announcement today was expected.”
Currently, Qantas and its budget subsidiary Jetstar control approximately 65 percent of Australia’s domestic market, while Virgin holds a 35 percent share, according to data from Australia’s competition regulator.
Last week, Australia’s competition watchdog endorsed a planned alliance between Virgin Australia and Qatar Airways, potentially leading to 28 new weekly return flights between Doha and major Australian cities. Virgin’s long-haul flights to Doha, anticipated to commence in June, will utilize aircraft leased from Qatar Airways, providing travelers greater value and options for routes to Europe, Africa, and the Middle East.
In contrast, Qantas maintains a partnership with Emirates, while Virgin has a code-sharing agreement with Etihad Airways, which is set to expire on June 1. Meanwhile, Bain Capital retains a majority stake in Virgin Australia, with plans for a AUD 1 billion ($630 million) public listing previously delayed.
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