Australian Watchdog Clears Qatar Airways’ Investment in Virgin Australia

Australia has officially approved Qatar Airways’ acquisition of a 25% stake in Virgin Australia from U.S. private equity firm Bain Capital, a move poised to shake up the nation’s aviation market, long dominated by Qantas. The decision, announced on Thursday, marks a significant development in the sector and comes after the Australian government had previously blocked Qatar Airways from expanding its flight services to major cities.

According to Reuters, the deal was given the green light following extensive consultations with industry players, unions, and other stakeholders. Treasurer Jim Chalmers emphasized that the decision was made in alignment with national interests. “My decision aligns with the advice of the Foreign Investment Review Board that this proposal is consistent with the national interest,” Chalmers stated. He further noted that the approval is subject to enforceable conditions ensuring Australian representation on Virgin’s board and safeguarding customer data.

Per Reuters, the approval could intensify competition within the Australian aviation market, where Qantas and its budget subsidiary Jetstar control approximately 65% of the domestic sector, with Virgin Australia holding the remaining 35%, according to data from the country’s competition regulator.

Read more: Australian Regulator Backs Virgin Australia-Qatar Airways Alliance

Virgin Australia CEO Jayne Hrdlicka welcomed the investment, highlighting its potential to drive growth. She stated that the partnership would enhance Virgin’s competitiveness and contribute to the airline’s market ambitions.

Meanwhile, Qantas reported an 11% rise in first-half profit, driven by robust demand, and announced a special dividend for the first time in over 20 years. When asked about the government’s approval of Qatar Airways’ investment, Qantas CEO Vanessa Hudson remarked that the outcome was expected and reiterated that the airline welcomes competition.

The decision follows the Australian Competition and Consumer Commission’s recent endorsement of a proposed alliance between Virgin Australia and Qatar Airways, which could introduce 28 new weekly return flights between Doha and Australian cities. Virgin has also announced plans to launch long-haul services to Doha starting in June, utilizing aircraft leased from Qatar Airways to offer expanded options for travelers to Europe, Africa, and the Middle East.

Qantas, which maintains an international partnership with Dubai-based Emirates, will likely face increased competition as Virgin’s agreement with Abu Dhabi-based Etihad is set to expire on June 1.

Source: Reuters