Why flights could soon be cheaper for millions of Australians
- Qatar Airways is eyeing Virgin Australia shares
- Domestic flights could be cheaper
State-owned Qatar Airways wants to buy a 20 percent stake in Virgin Australia.
One expert says the deal may lower domestic travel prices, but will more likely lower international fares.
Speaking on the Today show on Thursday, Australian aviation expert Geoffrey Thomas said a deal with Virgin would help the Qataris’ bid for more flight slots in Australia.
“But it also sets up a fascinating competition with its rival Emirates,” under the Qantas-Emirate partnership, he said.
“You get two big powerhouses competing for Australian traffic… This is good for competition.”
Domestic airfares could potentially fall if the 20 percent stake is approved, but Emirates and Qatar competing for international travelers would lower international prices, Thomas said.
Qatar Airways is one of the world’s largest airlines and was blocked by the federal government from operating more flights last year. Any deal between Qatar and Virgin would require Australian government approval.
The Australian Financial Review quotes anonymous sources close to the transaction as saying interest from Qatar could be formally announced next week.
Government-owned Qatar Airways wants to buy a 20 percent stake in Virgin Australia (stock image)
Qatar Airways and Virgin Australia announced a strategic partnership in 2022; ostensibly to compete with the profit-sharing alliance of Qantas and Emirates on flights between Australia and Europe via Dubai.
After courting but ultimately rejecting signing a deal with Qatar Airlines, Qantas resisted and the federal government blocked Qatar Airways from getting more flights to Australia last year.
The AFR reports that since Transport Minister Catherine King blocked Qatar Airways’ bid for expansion on the grounds of ‘national interest’, the allocations of Sri Lankan Airlines and Turkish Airlines have tripled and quadrupled, although neither airline has enough aircraft to support their to fill places.
Virgin Australia is owned by Boston-based private equity firm Bain Capital.
Bain bought Virgin when the carrier was under voluntary management in 2020.
A Virgin listing on the Australian Securities Exchange has been teased and delayed since January 2023.
This week the Australian reported that the IPO will take place before Christmas.
Virgin made a profit of $129 million last year.
Domestic airfares could potentially fall if 20 percent stake is approved (stock image)