Qatar takes a 25% minority stake in Virgin Australia

Hey friends,

So there’s been some exciting news this week that will shake up Australia’s aviation industry with Qatar Airways announcing its intention to take a 25% minority stake in Virgin Australia.

This comes a year after the Labor government rejected Qatar’s request to double its flight operations into Australia. This news should hopefully make things more competitive between Virgin Australia and Qantas, however, let’s explore this announcement in more detail in today’s newsletter.

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✈️ Virgin Australia to restart international flights

So probably the most exciting news from this announcement is that Virgin Australia has also revealed plans to launch Virgin Australia flights from Sydney, Melbourne, Brisbane, and Perth to Doha by mid-2025.

The service is set to kick off as a wet lease agreement, which means that Qatar will provide the aircraft, crew, and catering on all those flights whilst Virgin Australia will pick up the bill.

From Doha, this would essentially open the door to over 100 different routes and destinations across Europe, and North America that Qatar flies to regularly from Doha.

This is an exciting step forward in the right direction for Virgin Australia which stopped doing long-haul international flights after entering administration during the COVID-19 pandemic.

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👍 Boost to the Velocity Frequent Flyer Program

The Velocity Frequent flyer program will also benefit greatly from this move. The official press release states that this partnership “will come with increased earning opportunities of Velocity Points and status credits and also greater availability of points-based redemption opportunities”

There will also be enhanced code-sharing arrangements, which for those of you who don’t know, code sharing is an agreement between airlines to sell seats on each other’s flights. This gives the appearance of airlines flying to more destinations and by doing so, the airlines typically share the revenue on that ticket.

Qatar has been a codeshare partner of Virgin Australia since 2022. However, this investment by Qatar should only open more opportunities for Virgin Australia.

Whilst this wasn’t mentioned at all in the press release, I’m hoping that Virgin Australia will bring out a similar arrangement with Qatar that mirrors the one that it currently has with Singapore Airlines.

Virgin Australia currently has an arrangement where you can transfer your velocity points to Singapore Airlines at a rate of 1.55 -1.

Singapore Airlines is another minority stakeholder in Virgin Australia, owning approximately 23% of the company. So if they were to introduce a similar arrangement between Virgin Australia and Qatar Airways that would be a huge game changer and make the Velocity frequent flyer program even more competitive in my opinion.

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❓ What this means for Qantas

So what does this mean for Qantas who is Virgin Australia’s biggest competitor?

Well the stock market doesn’t seem to think this is good news for Qantas, because since the pending partnership was announced, Qantas share prices have dipped as much as 5.5%.

Now despite Qantas and Qatar both being part of the Oneworld Alliance, Qatar has already been significantly reducing the availability of point-based award seats to Qantas frequent flyer members, especially for their highly regarded Q-Suite business class seats, with the majority of award seats available to Qantas members being in economy.

Instead, most of those premium cabin award seats have been reserved for Virgin Australia and I only foresee that trend to continue moving forward now that Qatar has made a significant investment into Virgin Australia.

Regardless of this, with Virgin Australia now dipping its toes back into long-haul international flights this will hopefully make international flights more competitive from a pricing perspective, given Australians will have more choice now when it comes to who they fly with.

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