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· Posted on
December 2, 2024

Virgin Australia and Qatar Airways get closer to tying the knot as Qantas looks to crash the wedding

Virgin Australia and Qatar have taken one step closer to formalising this marriage after getting the ACCC's green light.

What's the key learning?

  • According to Virgin Australia, Australian airfares to Europe have jumped more than 40% since COVID.
  • And after Virgin Australia went into voluntary administration in 2020, this reduced the seat capacity of the airlines - which is mostly dominated by Qantas Airlines.
  • With this new deal between Virgin Australia and Qatar Airways, additional seats will be opened and hopefully ease up the fares for flights in and out of Australia.

👉 Background: Virgin Australia is the Australian airline that launched back in 2000 but went bust during COVID. And, just when Qantas thought it had the airline market all to itself, Virgin Australia rose like a phoenix out of the ashes.

👉 What happened: Back in October, Qatar Airways announced its plans to buy a 25% stake in Virgin Australia — subject to the ACCC and FIRB’s approval. Now, Virgin Australia and Qatar have taken one step closer to formalising this marriage after the ACCC has approved Virgin Australia to sell tickets on Qatar Airways-operated flights from Australia. This means that Qatar Airways will effectively double its flights in and out of Australia from June 2025.

👉 What else: According to ACCC, this is just an ‘interim authorisation’ and the final decision won't be made until March/April next year. So now, Qantas is digging in its heels extra deep to try and stop this deal from taking place.

What's the key learning?

💡More airline capacity typically means more competition and therefore lower airfares — and it all comes down to supply and demand.

💡This new Qatar-Virgin deal will mean there is more than 1,400 new seats available each day from Australia to somewhere overseas. So, having more capacity means that airlines need to be more competitive on prices.

💡Here's the thing: Qatar can reduce its airfares a lot more than Qantas can, largely because Qatar Airways’ labour costs are estimated to be about a third of Qantas’ due to different industrial relation agreements. So Qantas is in for a big big fight.

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