What if Qatar Airways buys into Virgin Australia?
The relationship between Oneworld members Qantas and Qatar Airways could take another left turn…
By David Flynn, June 27 2024
Speculation continues to swirl that Qatar Airways will buy into Virgin Australia.
It’s a scenario that has been indulged ever since the airline was rescued and rebooted in 2020 under the private ownership of Bain Capital, but has gained new altitude in recent months.
Now a report in the typically well-sourced Australian Financial Review says Qatar Airways “is negotiating to take as much as a 20% stake in Virgin Australia.”
“Two sources close to the transaction, who spoke on condition of anonymity citing the sensitive nature of discussions, said Virgin’s advisers had also considered selling a stake to Singapore Airlines,” the AFR notes, adding that “Qatar’s interest in a stake in Virgin could be announced as early as next week.”
Qatar Airways is no stranger to this strategy: the Gulf carrier already holds a 10% stake in Cathay Pacific plus 20% in IAG, the parent of British Airways, Iberia and Aer Lingus, among others.
And as the paper points out, any such deal would need to be approved by Australia’s Foreign Investment Review Board, “and the transaction could ultimately be blocked by the government.”
But should Qatar Airways’ proposal to buy into Virgin Australia clear those hurdles, it will result in a seismic shake-up in the country’s aviation industry.
So what could this mean to travellers?
As previously reported, Qatar Airways has already applied for an additional 28 flights per week from its Doha hub into Sydney, Melbourne, Brisbane and Perth.
This would mean a double-daily service for Sydney, Brisbane and Perth, with three flights per day for Melbourne.
Any significant investment in Virgin Australia would obviously add weight to the argument to add those flights, and perhaps even more.
The partnership between Virgin Australia and Qatar Airways might even be burnished to add benefits beyond the current earning of Velocity Points and status credits, alongside perks for Velocity members such as access to Qatar’s frequent flyer lounges in Doha.
Qantas & Qatar Airways
Meanwhile, the already frosty relationship between Qantas and Qatar Airways would descend by several degrees.
Despite both being members of the Oneworld alliance, there’s been little love lost since Qantas lobbied against Qatar’s expansion into Australia.
Oneworld is admittedly a broad church. While Qantas and American Airlines are close collaborators, Qantas and Cathay Pacific might be better described as ‘frenemies’.
There are also bespoke partnerships with airlines outside of Oneworld, and often with members of competing alliances, such as Qantas working with Air New Zealand (from Star Alliance) on domestic flights and Shanghai-based China Eastern (from SkyTeam).
Qatar Airways is already preferencing Virgin Australia Velocity members for the release of points-based award seats – especially for its highly-regarded business class Qsuite – while reportedly throttling their availability to Qantas frequent flyers and leaving Qantas only with poor-value economy redemptions.
Executive Traveller readers: what are your expectations for how this will all play out across the coming weeks and months?
Qantas - Qantas Frequent Flyer
21 Jan 2014
Total posts 318
The only reason one buys 20% of something is because they want to eventually own at least 51%, and that will be the real issue for Qatar, and the unions will knock this on the head before it even starts so doubt it would happen, Singapore Airlines on the other hand would not face the same issues and would be an ideal owner.
QF
11 Jul 2014
Total posts 972
When I sell something I would like to sell it 5 times at 20% each time.
QF
11 Jul 2014
Total posts 972
If this was on the stock market I would have made a bucket load.
As per above "it will result in a seismic shake-up in the country’s aviation industry" correction, it will impact the Global Airline market with Qatar having an option in creating its own alliance group and bringing Avios and VA Frequent Flyer having its digital currency.
Virgin Australia - Velocity Rewards
24 Jan 2018
Total posts 715
I'm still struggling to see the benefits that might flow to me, given the price of Qatar fares. I'm much rather it was Singapore and Turkish Airlines.
Qantas - Qantas Frequent Flyer
05 Oct 2016
Total posts 101
QR prices? cheaper than most as from what I can see, at least in business class. I've priced a range of airlines and options for AU to EU over the next two months this week and QR pretty much wins hands down most weeks.
QF
11 Jul 2014
Total posts 972
I agree BT 100%
27 Sep 2022
Total posts 1
Prices?? Singapore is always more expensive than Qatar. You need to spend a little more time comparing.
Qantas - Qantas Frequent Flyer
10 Apr 2016
Total posts 58
Qatar Airways is only interested in order to generate traffic. Singapore Airlines was once an owner of Virgin. Making these discussions public no doubt would be deliberate in order to stoke the interest and drive up the price. The sale of a 20% stake will create a baseline for the eventual IPO. Assume whilst Singapore Airlines was burnt last time they will not sit idle given the traffic they have lost to Qatar that was once directed their way.
Qantas - Qantas Frequent Flyer
04 Nov 2017
Total posts 325
Considering the reports in AFR that VA reps had to approach SQ for interest and they've declined to reply suggests that SQ are learning from their 3rd failed attempt in the Australian market through losing millions on their VA 1.0 investment (and losing billions combined across their Ansett, Tiger and Virgin 1.0 attempts).
It'll probably take some considerable convincing to the SQ board if the Singapore fans aren't still giving up them "buying and taking over" VA.
QF
11 Jul 2014
Total posts 972
When SQ put an A350 into Cairns that gave an indication of what they thought would happen.
Qantas - Qantas Frequent Flyer
04 Nov 2017
Total posts 325
Plus SQ increasing DRW to daily 737-8 MAX when they previously operated 3/4 weekly year round.
I wouldn't be surprised if the SQ group dabbles in OOL (again) at some point, this time with their full service carrier SQ instead of their LCC (TR).
Qantas - Qantas Frequent Flyer
05 Oct 2016
Total posts 101
Demonstrating yet again the stupidity of QF. As I've said many times before they should have broken off with EK and got into bed with QR - which would have fed QR and not seen them trying to make friends with someone else...
Qantas - Qantas Frequent Flyer
26 Nov 2012
Total posts 120
Yes I remember a certain CEO saying when referring to EK over QR “why go with a Holden when you can have a Mercedes “ or words to that effect. Bad choice could/comparison in the long run I think. But live and learn.
Qantas - Qantas Frequent Flyer
05 Oct 2016
Total posts 101
Hilarious :) Hadn't heard that one, love the Karma - instead QF are now sticking to the Mercedes when they could instead have a Bentley!
23 Apr 2015
Total posts 23
Not a totally surprising move at a high level, and would bring investment and expertise to Virgin, as well as access to fleet renewal orders potentially etc.
However that aside it just doesn’t sit well with me that a foreign state (with questionable human rights) owned carrier would have an influence on the Australian market and on a brand (VA) which is known to be progressive as both an employer and as an airline serving the diverse Australian public. A quick google on Qatar Airlines history of rights for their female employees will give you some insight and food for thought, however there is no denying how shiny and luxurious their aircraft and Q Suites are and why Australians generally love the airline - but at what cost?
Qantas - Qantas Frequent Flyer
05 Oct 2016
Total posts 101
ok. You think QF respects their workers rights legally at all times?
Qantas - Qantas Frequent Flyer
26 Nov 2012
Total posts 120
Possibly, but their country doesn’t fire their employees and jail them after entrapping them for being gay.
Virgin Australia - Velocity Rewards
06 Aug 2017
Total posts 85
I'm no fan of the Qatar government but in Qatar Airways' defence, their new CEO, Badr Mohammed al Meer, is very different from their former CEO, and he has behaved totally differently towards Qatar's employees. I don't think it's fair to tar the current leadership of the airline with the same brush as (former CEO) Akbar el Baker. The new CEO has lifted a lot of the restrictions on employees and reports suggest that staff morale is sky-high since his appointment.
16 Oct 2012
Total posts 46
Well observed. And any gay Australian would be advised to avoid all the ME carriers entirely. Particularly if their itinerary involved a stopover in the region. The Smart Traveller website makes the situation in the ME clear.
07 Mar 2022
Total posts 63
Interesting the comments made about females in business and is this why the pin has been pulled by JH and also what about the staff at VA, forget about the guy passengers.
03 Jun 2019
Total posts 30
I remember from the Qantas Privatisation Act that foreign ownership exceeding 49% will result in the airline loosing all of its international traffic rights. Does that apply to Virgin as well?
27 Jun 2024
Total posts 1
Why would the “Qantas Privatisation Act” apply to Virgin?
QF
11 Jul 2014
Total posts 972
I'd be really interested for someone to prove to me that 51% of Qantas is owned by Australians!!!
Qantas - Qantas Frequent Flyer
08 Dec 2014
Total posts 52
UUAA, it’s a legal requirement (that only applies to Qantas) and if foreign ownership ever tips above 49%, whoever bought in last is forced to sell their shares.
Not sure where they are now but, during the pandemic, Australian ownership of Qantas was as high as 80%.
Virgin Australia - Velocity Rewards
24 Jan 2018
Total posts 715
NO WAY IN THE WORLD is Qantas beneficially owned on a consistent basis by 51%+ by Australian resident shareholders. I suspect it gyrates over time between 40% and 60% Australian ownership. All that obligation accomplishes is 'protect' Qantas from foreign takeover and prevent internal enthusiasm for it to happen, thus keeping management and control in Australia. But I think you'll find it's been left to Qantas to self-police its own compliance with that obligation.
Full Disclosure: I'm not a closet ASIC-junkie in possession of confidential information, just my own opinion.
QF
11 Jul 2014
Total posts 972
I’ve had the same advice B-T, let’s lobby the government, I’ve got a brother who is forensic accountant, he would love the job.
Qantas - Qantas Frequent Flyer
08 Dec 2014
Total posts 52
Evian - Clearly it doesn’t apply to them as Virgin is practically 100% foreign owned now.
Qantas - Qantas Frequent Flyer
05 May 2015
Total posts 5
Would prefer SQ ownership and an eventual application to join Star Alliance.
03 May 2013
Total posts 675
It's high time Qatar Airways was kicked out of oneworld. Absolutely no benefit whatsoever.
Qantas - Qantas Frequent Flyer
07 Aug 2013
Total posts 250
Correction required, it's just minimal benefit to you as a QFF, you still get economy reward seats though! The other One World carriers including BA who share the same avios program enjoy greater advantages.
Virgin Australia - Velocity Rewards
24 Jan 2018
Total posts 715
I do wish Star Alliance had its own form of 'currency' like the Avios program, and that Virgin joined that alliance.
Virgin Australia - Velocity Rewards
11 Dec 2014
Total posts 8
I too would love to see VA join Star Alliance. Ever since we lost Ansett we have been flapping in the breeze. QF is Oneworld, maybe Rex could join Skyteam and then VA join Star Alliance ?
Virgin Australia - Velocity Rewards
07 Dec 2015
Total posts 52
I think VA may ultimately be forced (again) out of their current structure and QR is likely a smart investor and operator to have in your corner. VA needs a long term committed airline investor making longer term strategic and structural decisions. As much as I've loved SQ over the years (not so much in recent years) and their long association in the local market, I reckon they are out - burnt too many times in the Australian market
As unpopular and crazy as it might sound, I reckon VA needs to go FSC or ULCC - they can't stay in the middle if they want to grow beyond where they are now.
Qantas - Qantas Frequent Flyer
04 Nov 2017
Total posts 325
Echoing what was said in the post above, considering the AFR reports that the VA reps had to approach SQ (instead of the other way around) and show very little (if not zero interest) says it all, SQ are still too wary/still burnt from their three previous attempts in the Australian domestic market over the past few decades.
I don't see VA going full (U)LCC, their Velocity Frequent Flyer was the only division that was consistently making revenue/profits throughout both incarnations of Virgin Australia. To sell VFF off to go full ULCC is "cutting off your nose to spite your face"
Qantas - Qantas Frequent Flyer
18 Jan 2017
Total posts 24
Allowing Qatar Airways to have extra flights into Australia would undoubtedly lower air fares to Europe as it frees more seats. Try and get a Premium Economy or Business seat on EK to Dubai and Europe in under 3 months booking time. Almost impossible, let alone to dream of an upgrade.
As to buying into Virgin, why not, we live in a free economy without restrictions.
03 May 2024
Total posts 1
Qatar airways owns 15% of LATAM airlines which is skyteam and Qatar uses air New Zealand lounges for customers in Brisbane Syd and Melbourne and Perth preferably over Qantas and there star alliance so like the other big 2 ME airlines alliances don't really matter it's more to do with connectivity for passengers and Australia is a key market for them
Qantas - Qantas Frequent Flyer
10 Jun 2015
Total posts 6
Qatar was unsuccessful coming through the front door, so now they are trying to come into Australia via the back door through Virgin🤔
15 Feb 2023
Total posts 5
Lets say QR ends up with 20% of VA. Would this then give VA and or QR/VA codeshare J class international pax foot in the doors of the NZ lounges in SYD & BNE?
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