Qatar Airways to acquire 25% of Virgin Australia

[Saab34]

I predict they would need to provide a timeframe for a transfer from Wet to in-house.

I think 2 years from approval would be achievable. I’d expect 787-9 as they have many still on order. Those Virgin 777s are end of life and will scrapped by the decades end, no chance.

Exciting times ahead.

 

[justinbrett]

Was any government authorisation required for Finnair to start operating flights for Qantas?

Yes. But it was never an indefinite wet lease, it was always going to transfer to dry after 2 years.

There was a fair bit of opposition at the time due to perceived loss of Australian jobs.

 

[ben95]

QR wet lease is going to be difficult to defend,

Why would that be the case? Is there specific requirement about wet lease or is it just because of the “public interest” thing?

At one point Bonza even wet leased from Canada and the government didn’t seem to blink. It’s hard to see why just wet leasing would make VA ineligible for a DOH slot.

 

[airlinemn]

Why is everyone speculating on the type of lease arrangement?

It literally says wet lease in the press release. It also says BNE,SYD, PER and MEL are where they will operate from. It also says from mid next year.

 

[ben95]

Yes. But it was never an indefinite wet lease, it was always going to transfer to dry after 2 years.

There was a fair bit of opposition at the time due to perceived loss of Australian jobs.

Is that true? I’ve tried to fact check this but couldn’t find any sources that would suggest the wet lease were objected to. Would be nice if you can link yours. The best I found was the QR newsroom release - there was no note on “pending regulatory approval” on the Finnair wet lease arrangement suggesting the wet lease didn’t need approval from the government. A brief search seems to suggest the wet lease didn’t actually raise much eyebrow outside the FF community.

If it’s union talk I’d tend to dismiss it in this particular context. Unions will threaten a strike but IASC won’t base their decisions on just union demands.

 

[justinbrett]

Why would that be the case? The law pretty much don’t care in this regard

QF wet leases from Finnair and a number of cargo flights from Atlas air to US and China. At one point Bonza wet leased from Canada’s flair air to operate domestic route and the government didn’t even blink on the grounds that they were Canadian wet leased aircraft.

As long as the bilateral between Qatar and Australia does not prohibit wet lease like the HND bilateral there’s no ground for IASC to object to the frequency allocation just because VA plans to operate the flight with wet leased aircraft.

The IASC has nothing to do with domestic capacity, and domestic carriers can be 100% foreign owned.

The law (Qantas Sale Act) requires airlines to be 51% Australian owned . QF wet leasing two routes doesn’t make it a Finish airline. It’s quite objectively still an Australian airline. This is a much harder requirement for VA being a foreign owned airline.

Is that true? I’ve tried to fact check this but couldn’t find any sources that would suggest the wet lease were objected to. Would be nice if you can link yours. The best I found was the QR newsroom release - there was no note on “pending regulatory approval” on the Finnair wet lease arrangement suggesting the wet lease didn’t need approval from the government. A brief search seems to suggest the wet lease didn’t actually raise much eyebrow outside the FF community.

If it’s union talk I’d tend to dismiss it in this particular context. Unions will threaten a strike but IASC won’t base their decisions on just union demands.

Any changes to international services, even QF metal to QF metal, requires approval. That’s why you often see “subject to regulatory approval” on the booking site. The AY flights had this when they first went on sale, I’m sure there’s a screenshot on AFF somewhere.

 

[TomVexille]

Now how many of us predicted the wet lease arrangement way back at the start of the QR slot saga, albeit rather tongue in cheek

 

[drron]

VA as it is obviously have a set up that allows them to fly International routes. After all they have been flying internationally to HND for over a year. Pretty sure Bain would have a clued up legal team to ensure that continues.

 

[FlyingKangaroo]

After the government approved QF's wet lease with Finnair, and given the perception -- in some cases based on substance and others just optics -- of the cosy relationship between QF and the government, I'd be surprised if either party tried very hard to put the kibosh on a substantively similar arrangement between VA and QR, especially if the initial period for the wet lease is the same or less than QF's arrangement with Finnair. Particularly in the lead-up to an election and in an environment where QF is still subject -- sometimes fairly, sometimes not -- to so much public scrutiny.

And yes, QF's wet lease with Finnair eventually transitions to a dry lease, and I hear the suggestion that this may have had something to do with more favourable approval of the QF/AY wet lease, but as in any commercial agreement, there'd really be nothing stopping either AY or QF from terminating that agreement (notwithstanding any contractual penalties for doing so) before that transition. So I wouldn't put too much weight on that eventual transition being material to approval of the initial wet-lease. Also nothing stopping VA from saying, "This is a planned short-term measure for X years while we look to source our own aircraft." That's arguably more compelling a justification than QF which has long-haul aircraft but wanted to deploy them elsewhere while still enjoying the revenue from the routes now served by Finnair on their behalf. And if the issue is "protecting jobs," the fact is the jobs are not here for X years, and saying you'll bring them back later after you've outsourced them isn't particularly compelling in my view if that's the priority.

(As an aside: I don't think such a substantial investment in VA by QR is just a petty response to the previous saga for more routes, but the optics are certainly a bit amusing, particularly given the best arguments to make against the wet lease now lose their merit given QF's busy doing the exact same thing with a carrier that has no meaningful ownership stake in or vice versa.)

 

[MooTime]

No less than 4 separate times are Australian jobs mentioned in the Virgin newsroom ann.

Obviously a key to approval.

@justinbrett great points re lease & gov approval process, can't be underestimated.

 

[Harrison_133]

Also nothing stopping VA from saying, "This is a planned short-term measure for X years while we look to source our own aircraft." That's arguably more compelling a justification than QF which has long-haul aircraft but wanted to deploy them elsewhere while still enjoying the revenue from the routes now served by Finnair on their behalf.

From the press release:

"The proposed wet lease services will begin in mid-2025, allowing Virgin Australia to assess the longer-term merits and viability of wide-body aircraft flying while providing Australians with greater local competition for their long-haul travel needs in the near-term."

 

[Blinky]

This might have been covered earlier in this thread, but is the cancellation of the Etihad partnership with VA expected sooner rather than later?

 

[lovestotravel]

If this goes through, which it will..

I guess this will be the last one of these

Pride Flight 2025 | Virgin Australia

Pride Flight 202 i5s on sale now!

www.virginaustralia.com

Seems I'll be back to flying QF

 

[Himeno]

VA as it is obviously have a set up that allows them to fly International routes. After all they have been flying internationally to HND for over a year. Pretty sure Bain would have a clued up legal team to ensure that continues.

QR taking a 25% stake in VA would be an ownership change. If ownership of an Australian airline becomes such that it can no longer be considered to be an "Australian" airline, they no longer have access to capacity applications from IASC.

QR using part ownership of VA to access the Australian half of the Australia-Doha capacity, especially when using their own aircraft under a VA code, would be a clear attempt to get around the Air Service Agreement limits.
IASC is a part of the Department of Infrastructure, Transport, Regional Development, Communications and the Arts and Policy Statements issued by the minister form part of the criteria used when allocating capacity.

 

[HS-TQE]

QR taking a 25% stake in VA would be an ownership change. If ownership of an Australian airline becomes such that it can no longer be considered to be an "Australian" airline, they no longer have access to capacity applications from IASC.

QR using part ownership of VA to access the Australian half of the Australia-Doha capacity, especially when using their own aircraft under a VA code, would be a clear attempt to get around the Air Service Agreement limits.
IASC is a part of the Department of Infrastructure, Transport, Regional Development, Communications and the Arts and Policy Statements issued by the minister form part of the criteria used when allocating capacity.

VA 2.0, like with Ansett and Virgin 1.0 has both set up international subsidiaries to meet the 51% Australian ownership requirement. Ansett International had 51% ownership by "Australian Financial Institutions" and the same with both incarnations of Virgin Australia International.

Qantas IIRC had objections to that requirement when Ansett did that with their "Ansett Australia International" subsidiary when Ansett became a wholly owned subsidiary of Air New Zealand.

It's likely that Virgin Australia's International subsidiary setup (the 51% Australian institutions ownership will remain the status quo) should the Qatar 25% stake get the go ahead by the FIRB.

 

[Himeno]

And yes, QF's wet lease with Finnair eventually transitions to a dry lease, and I hear the suggestion that this may have had something to do with more favourable approval of the QF/AY wet lease, but as in any commercial agreement, there'd really be nothing stopping either AY or QF from terminating that agreement (notwithstanding any contractual penalties for doing so) before that transition.

There is a difference between one airline asking to lease aircraft from another who isn't using them in order to operate routes they don't have enough aircraft for, and a foreign airline taking a large stake in a local airline, then giving that local airline aircraft in order to operate set routes which benefit the new foreign owner.
It might be different if QR was giving VA aircraft to operate BNE-TYO or SYD-LAX.

 

[jrfsp]

If this goes through, which it will..

I guess this will be the last one of these

Pride Flight 2025 | Virgin Australia

Pride Flight 202 i5s on sale now!

www.virginaustralia.com

Seems I'll be back to flying QF

Why will it -QR doesn’t care, look at BA , IB etc

 

[SeaWolf]

If this goes through, which it will..

I guess this will be the last one of these

Pride Flight 2025 | Virgin Australia

Pride Flight 202 i5s on sale now!

www.virginaustralia.com

Seems I'll be back to flying QF

QR isn't going to get involved in that sort of micromanagement, it certainly hasn't with the other airlines it has a stake in, like BA for example, which even has a whole section on their website dedicated to LGBTQ+ holidays:

British Airways - Information Page

I can't see there being any major cultural or marketing changes at VA as a result of this, in the same way there hasn't been at BA or IB.

 

[lovestotravel]

Why will it -QR doesn’t care, look at BA , IB etc

Hmm good point, I didn't know that...

 

[moa999]

This is a much harder requirement for VA being a foreign owned airline.

By my understanding the international structure (which has a notional 51% Australian shareholding via grandfathering of some former ownership) survived the administration (remember the main VA entity was also previously foreign owned).. so these flights will be notionally operated by 'VAi' just with QR providing wet leased services.. which is no different to how the NZ and Pacific flights operate today.

Eg. See Fiji


And NZ

Although you do occasionally see strange things domestically as well