Qatar Airways to acquire 25% of Virgin Australia

[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.

 

[Melburnian1]

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.

While you are correct in one sense, the initiative will create jobs in areas like catering and further buttress any Australian companies that supply to the proposed QR/VA wet leasing arrangement. Inbound tourism should benefit, though Australia overall has a deficit in tourism services as Australian citizens spend more overseas than do foreigners who come here for business, VFR or as holidaymakers.

 

[777]

Something that I don't think has been mentioned yet: (apologies if it has!)

If VA flies to Doha, it would mean that Virgin's own, better, Velocity reward points table would apply: ie, Australia east coast to Doha for 71,700 Velocity points for a Business class flight. To fly to Doha currently on Qatar costs 104,000 Velocity points (not to mention the high carrier charges).

Conceivably, VA would move Qatar redemptions into the better redemption table (which currently includes Virgin Australia, United, and Virgin Atlantic).

If that happens, a Business Class redemption on VA/QR to Europe could be booked all from the one redemption table and would cost 127,500 Velocity points, with lower carrier charges (at least on the Australia-to-Doha leg) as well.

That, coupled with the greater availability that comes from increased flights, would be a massive win for Velocity members and would cement Velocity as the FF programme of choice for flying to Europe and back.

In the same vein: if it is a VA international flight (wet lease or not) there should theoretically be long haul J class upgrades available for velocity members for first time since covid.

 

[justinbrett]

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.

Apparently JH has refused to commit to a dry lease as that has been a demand from QF, saying it’s not possible within the timeline of the agreement (5 years).

A JV where QR does the scheduling, piloting, crewing, maintenance; what exactly is VA doing? This is where they might come unstuck.

The VAi structure using Australian based aircraft and Australian based crews is one thing, but this is a whole other animal. They may as well just award QR double the capacity and save everybody from this charade.

 

[Daver6]

The VAi structure using Australian based aircraft and Australian based crews is one thing, but this is a whole other animal. They may as well just award QR double the capacity and save everybody from this charade.

Well if only the Labor government wasn't bribed by QF....

 

[Human]

Apparently JH has refused to commit to a dry lease as that has been a demand from QF, saying it’s not possible within the timeline of the agreement (5 years).

A JV where QR does the scheduling, piloting, crewing, maintenance; what exactly is VA doing? This is where they might come unstuck.

The VAi structure using Australian based aircraft and Australian based crews is one thing, but this is a whole other animal. They may as well just award QR double the capacity and save everybody from this charade.

It’s not a charade if you take JH’s comment about putting Virgin’s “toe in the water” at face value. What she clearly means by that is that it’s a precursor to VA returning to long haul flying with its own aircraft.

Of course she might be lying… but whatever you think of her, I can’t think of a time when she’s personally lied while being with VA. Worth giving her the benefit of the doubt?

 

[Saab34]

It still sounds like long haul widebody ops at Virgin is many years away, they seem to be pushing the line that this is a ‘test’ for Virgin to analyse demand and viability for a future entry into long haul ops.

I find it very hard to believe that this will be get over the IASC Line?

 

[jase05]

They may as well just award QR double the capacity and save everybody from this charade.

If only Cathy and her cronies weren’t under QF’s influence this might have happened

 

[ozstamps]

As far as I understand, every cent of what QR pay goes right into Bain's pocket right now - correct?

They are laughing all the way to the bank already based on what they paid at fire sale entry price BEFORE this mega sugar hit of cash.

This is all massive dollar CREAM, and the IPO will be triple cream with cherries on top.

An IPO offered with these totally illusionary 'overseas routes' for VA will simply make it ever juicier looking to investors.

 

[justinbrett]

Of course she might be lying… but whatever you think of her, I can’t think of a time when she’s personally lied while being with VA. Worth giving her the benefit of the doubt?

Why? JH is out the door. Even if she does believe that, doesnt mean the others running the business (QR and Bain) do.

VA can wet lease from a number of different airlines, and put the aircraft on number of routes.

You don’t see that QR aircraft flying to the QR hub on a QR codeshare isn’t really VA flying at all? This is just QR. JH called it project doubles. Makes a lot of sense now.

It doesn’t test anything, except whether QR can support double daily flights to Australia. It doesn’t bring VA any closer to having its own fleet or flying to destinations other than DOH.

 

[elanshin]

I would say VA dropping HND speaks volumes about their real intentions in the widebody Int'l market.

If they were serious, they wouldn't have dropped it and asked for a dry lease.

 

[SYD]

As far as I understand, every cent of what QR pay goes right into Bain's pocket right now - correct?

They are laughing all the way to the bank already based on what they paid at fire sale entry price BEFORE this mega sugar hit of cash.

This is all massive dollar CREAM, and the IPO will be triple cream with cherries on top.

An IPO offered with these totally illusionary 'overseas routes' for VA will simply make it ever juicier looking to investors.

Yep, that’s what I said up thread. This is cash to Bain NOT a capital injection to VA.

QR have just bought access to slots that would have been “free”. Instead, paid $x Bil?

 

[ben95]

Apparently JH has refused to commit to a dry lease as that has been a demand from QF, saying it’s not possible within the timeline of the agreement (5 years).

Of course she might be lying…

I don’t think those matter really. The IASC can and should impose those types of condition and it’s up to the business to decide whether it’s still profitable for them. If this turns out to be a good deal for them I’m sure they’ll turn around down the road - if not they can come back to the government and explain why they think only a wet lease is workable and the government can reassess the situation then.

If QR wanted to utilize the Australian side slots in the bilateral for its own benefit, then it’s only fair that the Australian aviation sector gets a fair share. A mandatory transition to dry-leased can achieve that in the long term.

 

[TheInsider]

A mandatory transition to dry-leased can achieve that in the long term.

What's stopping the dry lease from not happening then? QR/VA could just say we'll do it in 10 years' time and then sell off the business again. Long term doesn't work for aviation and these type of agreements

 

[ben95]

What's stopping the dry lease from not happening then? QR/VA could just say we'll do it in 10 years' time and then sell off the business again

Then too bad you don't get the extra flight feeding the Doha hub and back to your 28 weekly frequencies? If QR wants to sell it's stake to someone else it can do it at any time with or without the wet-lease arrangement.

Long term doesn't work for aviation and these type of agreements

I disagree. Most airlines' fleet planning happen years or decades ahead of time, but only decides where to send those aircrafts when its close to getting them. Alliance JVs are typically authorised for 3-5 years and it's not unprecedented that they don't get renewed (QF/MU as the most recent example). So clearly running an airline involves balancing long-term planning and short term agility as environment changes.

I don't see why VA/QR shouldn't be force to do the same in that it should be allowed test the water for a bit, decide if the long haul JV with QR is a good business then commit with a long-term fleet arrangement that benefit local workforce if it decides to continue instead of simply refusing this or allowing QR to bypass the bilateral forever.

 

[elanshin]

I disagree. Most airlines' fleet planning happen years or decades ahead of time, but only decides where to send those aircrafts when its close to getting them. Alliance JVs are typically authorised for 3-5 years and it's not unprecedented that they don't get renewed (QF/MU as the most recent example). So clearly running an airline involves balancing long-term planning and short term agility as environment changes.

I don't see why VA/QR shouldn't be force to do the same in that it should be allowed test the water for a bit, decide if the long haul JV with QR is a good business then commit with a long-term fleet arrangement that benefit local workforce if it decides to continue instead of simply refusing this or allowing QR to bypass the bilateral forever.

Fleet planning for established mature airlines yes. growing and expanding airlines - no. They tend to move a lot faster and with conviction. Dipping your toe in the water doesn't work with aviation because its hyper competitive. QR's competition isn't just QF. It's EK, WY, TK, SQ, CX, RX(soon), EY.

The landscape in which they operate could vastly be changed and challenged over the next 3-5 years as well. VA "dipping" their toe in the water to appease QR could also get caught in the crossfire if they have no conviction to fly international and relying on QR to support them the whole way.

 

[ben95]

growing and expanding airlines - no. They tend to move a lot faster and with conviction. Dipping your toe in the water doesn't work with aviation because its hyper competitive.

VA "dipping" their toe in the water to appease QR could also get caught in the crossfire if they have no conviction to fly international

Sorry I’m really confused: are you saying 1. VA should just lease a few wide bodies and enter the international market “with conviction” or 2. they shouldn’t even bother trying and just be happy being Australia’s 2nd domestic airline because they have “no conviction” or 3. the VA/QR wet lease should be allowed forever because VA has “no conviction” and so we should just let QR get what they want?

I think we can all agree 1 is high risk and not going to happen under Bain ownership and 2 which is the status quo and is worse for consumer than what’s being proposed. Option 3 seems to suggest that the international operation is commercially sustainable if it’s goes on for a long time. If you are not going to mandate Australian based crew for the local jobs and tax revenue then you might as well declare that more flights to QR is good for the public and so do an open sky bilateral instead of having this perpetual wet-lease situation which effectively limit VA’s role to a marketing partner.