Qatar Airways to acquire 25% of Virgin Australia

[Melburnian1]

How Qatar outmanoeuvred Qantas on international flights

After Qantas successfully lobbied against extra Qatar Airways flights, the Middle Eastern airline has exacted revenge on the Flying Kangaroo with a deal that will increase competition and possibly result in cheaper fares.

www.abc.net.au

Some additional media coverage has came out this morning.

"Their ABC" ought stop referring to SYDTAS as 'the national carrier'.

As noted above, almost 75 per cent of passengers on Oz-bound or commencing international flight use non-QF Group carriers.

 

[justinbrett]

"Their ABC" ought stop referring to SYDTAS as 'the national carrier'.

As noted above, almost 75 per cent of passengers on Oz-bound or commencing international flight use non-QF Group carriers.

So what you’re saying is QF manages a 28% marketshare despite having 57 competitors? Almost triple the next closest competitor, SQ at 9.4%

Well when you put it like that, it’s rather impressive! Thanks for pointing that out.

Then again, why are we talking about QF?

 

[elanshin]

One of the biggest things that will determine and set the tone is if QR will leave the current VA SQ agreements alone or if they'll ask for amendments.

I hope that they leave it alone, but if they do mess with it, I wouldn't even be sure if this would be beneficial for VA. Would rather have SQ as a partner than QR by a long mile.

 

[TheInsider]

One of the biggest things that will determine and set the tone is if QR will leave the current VA SQ agreements alone or if they'll ask for amendments.

I hope that they leave it alone, but if they do mess with it, I wouldn't even be sure if this would be beneficial for VA. Would rather have SQ as a partner than QR by a long mile.

I believe QR wants to do best for QR, I really don't think they care about the other partners and will eventually want all that traffic, especially SQ's EU traffic. I can't see many of these extra 'partners' lasting too much longer.

 

[downtheback]

Gov might approve the buyout, but no way Virgin is allowed to wet lease those planes (long-term at least). Whilst an internation entity can run and own a domestic airline, any international airline needs to be australian domiciled. Qatar wet leasing to circumnavigate bi-laterals will come right up against this.

Don't they say "if you find it 10percent cheaper then we will refund" or something like that?

Wonder if Qantas would ever say that......,

Bunnings only price matches on the same item including #/weight/size etc. Funnily enough, bunnings seems to stock most items in exlcusive sizes that competitors don't get, rendering this mostly useless.

 

[justinbrett]

One of the biggest things that will determine and set the tone is if QR will leave the current VA SQ agreements alone or if they'll ask for amendments.

I hope that they leave it alone, but if they do mess with it, I wouldn't even be sure if this would be beneficial for VA. Would rather have SQ as a partner than QR by a long mile.

It’s easily fixed with geographic restrictions (ie Asia only for SQ, no Asia / Americas for QR) which is how QF/EK do it.

The current ACCC codeshare approval for VA doesn’t permit overlapping routes, so really nothing can be taken for granted, especially as QR already has a JV approved with BA/IB. I can’t see that becoming a foursome. QR may have to break away.

 

[Human]

I believe QR wants to do best for QR

Well, any company hopefully wants to do what's best for itself. In Australia that's a legal obligation, more or less.

But if it owns a part of VA, that means it will want a profitable, attractive and viable VA. One of the pillars of that at the moment is the SQ alliance. And remember that QR obviously can't match SQ's reach into Asia.

Companies have made stupider mistakes, but it would seriously undermine the value and attractiveness of VA and Velocity in particular, and therefore VA's profitability, if Qatar went down that road.

 

[elanshin]

I believe QR wants to do best for QR, I really don't think they care about the other partners and will eventually want all that traffic, especially SQ's EU traffic. I can't see many of these extra 'partners' lasting too much longer.

It’s easily fixed with geographic restrictions (ie Asia only for SQ, no Asia / Americas for QR) which is how QF/EK do it.

The current ACCC codeshare approval for VA doesn’t permit overlapping routes, so really nothing can be taken for granted, especially as QR already has a JV approved with BA/IB. I can’t see that becoming a foursome. QR may have to break away.

Which would put the whole thing in a conundrum if people start just transferring VFF to KF and booking on SQ. Then what? stop the transfer and kill one of the most lucrative aspect of VFF?

Losing SQ for QR is a net negative overall given our geographical location.

 

[p--and--t]

Then again, why are we talking about QF?

Many cant help themselves being obsessed OT with regular criticism of QF

 

[ben95]

but no way Virgin is allowed to wet lease those planes (long-term at least).

I can see the government to require that after X years VA will have Australian based pilot and crew operate “VA controlled” aircraft will be a condition and should be acceptable to Bain/VA. Ultimately I think this wet lease to get started then after X years transition to VA controlled operation within a JV setting is the best bet to have a viable 2nd international airline flying out of Australia.

In the long term that’s good for consumers as those being VA controlled aircraft can incentivize VA to expand into other international markets. It’s also good for the sector meaning more opportunities for pilots, crews and engineering positions. In the short term that does mean QR is probably profiting more from the wet lease arrangement compared to a typical JV where VA does its own flying but I think putting a time on it will give the business an opportunity to give this a go.

 

[RooFlyer]

Then again, why are we talking about QF?

Indeed.

Many cant help themselves being obsessed OT with regular criticism

It was the ABC. Dunno if they are obsessed or not, but I think its hard to avoid talking about The National Carrier (TM) when the discussion is on any aspect of the Australian aviation market. How will the dominant airline react? What will it do with competition (and I'm not talking about REX); what will it do to prices?

"There is only one thing worse than being talked about, and that's not being talked about."

 

[odysseus]

In the long term that’s good for consumers as those being VA controlled aircraft can incentivize VA to expand into other international markets. It’s also good for the sector meaning more opportunities for pilots, crews and engineering positions. In the short term that does mean QR is probably profiting more from the wet lease arrangement compared to a typical JV where VA does its own flying but I think putting a time on it will give the business an opportunity to give this a go.

Not sure how much 'control' VA have here. Given that it's only on feeder routes for QR, and not even on a route that has a lot of destination traffic of its own, and not on any other routes, and not with any VA crew/personnel involvement, and where QR has long been seeking an increase in its own traffic for its purposes, I don't see any real ownership or control from VA's side. So if say VA felt it desirable to operate a service to the Pacific or US with similar timing, I'm not sure they have any control on that.

As for profitability, I suspect there's more upside for QR than VA. As it will improve profitability across all other QR services, plus these codeshare bookings, while VA only gains from the additional direct bookings (non-codeshare), then subtracts its wet lease costs. Not sure how freight will go, given its again limited in its scope, so will mostly be shared.

 

[HS-TQE]

There's also the possibility the ACCC and/or the IASC may require QR/VA to carry possibly two (maybe three) VA FAs per wetleased QR/VA service to DOH as part of the application, similar to how EY and HU had FA representatives (in addition to their codeshares) on VA-operated services to AUH and HKG respectively.

 

[TheInsider]

t’s also good for the sector meaning more opportunities for pilots, crews and engineering positions. In the short term that does mean QR is probably profiting more from the wet lease arrangement compared to a typical JV where VA does its own flying but I think putting a time on it will give the business an opportunity to give this a go.

There is absolutely zero benefit for any Australian workers here currently in the minimal information that's been given out. The wet lease is written as just that, there are currently zero plans to use any VA 'aircraft' or any VA crew.

 

[PERLHR]

There is absolutely zero benefit for any Australian workers here currently in the minimal information that's been given out. The wet lease is written as just that, there are currently zero plans to use any VA 'aircraft' or any VA crew.

Well apart from that QR might help VA flourish and hence create more jobs for what VA does in the future with QR. Perhaps.

 

[ben95]

The wet lease is written as just that, there are currently zero plans to use any VA 'aircraft' or any VA crew.

Please read my post more carefully. Specifically the assumption I based my statement on. In fact I’d even quote it for you.

the government to require that after X years VA will have Australian based pilot and crew operate “VA controlled” aircraft

If VA is not genuine about its intention to try and rebuild a long haul network then I’d agree it’s a QR slot mechanism and shouldn’t be approved.

 

[ben95]

Not sure how much 'control' VA have here.

If you dry-lease or own the aircraft then you’d have full control over them and that’s my point. The aircraft are paid for and VA has to fly them somewhere, JV or not.

and not with any VA crew/personnel involvement

Again, please read my post more carefully. VA dry leased or owned aircraft would have VA crew on them.

 

[Daver6]

Not sure how much 'control' VA have here. Given that it's only on feeder routes for QR, and not even on a route that has a lot of destination traffic of its own, and not on any other routes, and not with any VA crew/personnel involvement, and where QR has long been seeking an increase in its own traffic for its purposes, I don't see any real ownership or control from VA's side. So if say VA felt it desirable to operate a service to the Pacific or US with similar timing, I'm not sure they have any control on that.

As for profitability, I suspect there's more upside for QR than VA. As it will improve profitability across all other QR services, plus these codeshare bookings, while VA only gains from the additional direct bookings (non-codeshare), then subtracts its wet lease costs. Not sure how freight will go, given its again limited in its scope, so will mostly be shared.

When you say benefit for VA, it's actually the benefit for VAs owner, Bain Capital. That's who this deal benefits, otherwise Bain wouldn't be looking at selling to QR.