Virgin a and Qatar Airways partnership given green light by ACCC as Jim Chalmers flags pre-election call

The competition watchdog has pushed aside the protests of dominant player Qantas to flag approval for Virgin Australia’s proposed tie-up with Qatar Airways with a final confirmation expected before the looming Federal poll.

Boosting hopes of 28 extra flights each week from Australia’s four biggest capital cities to Doha, the Australian Competition and Consumer Commissioner said the partnership was likely to result in public benefits and to cause minimal, if any, public detriment.

The ACCC is now seeking submissions in response to its draft determination by March, before a final decision is made.

While the watchdog has ultimate approval over the lease agreement, the airlines still need the Foreign Investment Review Board to make a recommendation to Treasurer Jim Chalmers on whether to allow Qatar to buy a 25 per cent stake in Virgin.

That will need to happen before the Federal election is called because the agency will go into caretaker mode.

Dr Chalmers on Tuesday said he was yet to receive advice from the FIRB, but he would be “very, very surprised if I couldn’t make a decision on that before the election”.

Virgin has been owned by Bain Capital since the COVID-19 pandemic, when it was rescued from administration.

Under the plan, known in the aviation industry as a “wet lease”, Virgin will use Qatar’s aircraft and crew to operate 28 new weekly return services between Doha and Perth, Brisbane, Sydney and Melbourne.

It would effectively double the number of flights the Doha-based carrier operates to Australia, which would increase competition with Qantas and its One World partners.

The airlines started selling tickets for the new services, due to start in June, in December after the ACCC gave them an initial green light.

Qatar agreed to the tie-up deal and the lease after it was blocked from flying the services itself by the Albanese Government after opposition from Qantas.

“We consider that the proposed cooperative conduct would likely result in several public benefits including providing enhanced products and services for air travellers which would include increased choice of international flights, with additional connectivity, convenience and loyalty program benefits for consumers,” commissioner Anna Brakey said.

Ms Brakey said a number of “interested parties” had raised concerns about the possibility for Virgin to circumvent Australian workplace law by using Qatar Airways staff.

Concerns have also been raised about the impact of the deal on the Australian aviation workforce.

“We consider that Virgin Australia is unlikely to commence operating long-haul international services between Australia and the Middle East on a stand-alone basis in the next five years,” Ms Brakey said.

“In those circumstances, we do not consider that there is likely to be a material detrimental impact on the Australian aviation workforce as a result of the conduct.”

A Virgin Australia spokesperson said the airline welcomed the decision.

“This announcement... will deliver significant benefits to Australian travellers in the form of greater competition, value and choice when travelling to Europe, the Middle East and Africa, as well as significant benefits to the Australian economy more broadly, including tourism, job creation and better freight export options,” the spokesperson said.

Qantas is pushing for a time-limit on the Qatar-Virgin wet leases, similar to the two-year cap on the airline’s arrangement with Finnair for flights from Sydney through Singapore and Bangkok to Europe

In his ACCC submission, Qantas international chief Cam Wallace said the wet lease would allow Virgin to schedule services crewed entirely by Qatari pilots and crew, whose pay and conditions were substantially less than Australian crew .

Virgin Australia will have no incentive to develop its own international services using Australian crew on these routes if it can effectively bypass Australia’s laws and regulations,” said Mr Wallace, a former Air New Zealand executive who joined Qantas in 2023.