The Australian Competition and Consumer Commission (ACCC) has announced its proposal to grant authorisation to Virgin Australia and Qatar Airways to engage in cooperative conduct under an integrated alliance for a period of five years.
This decision is expected to enhance international flight options and provide significant benefits to air travellers.
Key Aspects of the Proposed Alliance
Under the proposed arrangement, Virgin Australia and Qatar Airways will introduce 28 new weekly return services connecting Doha with major Australian cities, including Perth, Brisbane, Sydney, and Melbourne. Virgin Australia will operate these flights using Qatar Airways’ aircraft and crew under a ‘wet lease’ agreement.
The ACCC has identified several anticipated public benefits resulting from this alliance, including increased connectivity, improved convenience, and enhanced loyalty program benefits for consumers. Additionally, the arrangement is expected to bolster competition within the international airline market, thereby offering more travel choices for Australian passengers.
Public and Industry Concerns
Despite the expected advantages, some stakeholders have expressed concerns regarding the alliance’s potential impact on the Australian aviation workforce. Specifically, critics argue that the use of Qatar-based crew on the new routes might circumvent Australian workforce laws and regulations. There is also apprehension about the long-term implications for local employment opportunities in the aviation sector.
In response to these concerns, ACCC Commissioner Anna Brakey noted that Virgin Australia is unlikely to operate long-haul international services to the Middle East independently within the next five years. Given this context, the ACCC does not foresee significant detrimental effects on the Australian aviation workforce due to this partnership.
Regulatory Approvals and Consumer Protections
The new services remain subject to final regulatory approvals by the ACCC and other governmental agencies. To facilitate an orderly transition, the ACCC granted interim authorisation to Virgin Australia and Qatar Airways on 29 November 2024, enabling them to commence marketing and selling the Australia-Doha services.
As part of this interim authorisation, the ACCC secured a court-enforceable undertaking from both airlines. This ensures that in the event the necessary regulatory approvals are not granted, customers who have already booked flights under the new alliance will be offered a refund or alternative travel arrangements at no extra cost. Additionally, affected passengers will receive compensation for any reasonably foreseeable costs incurred.
Implications for Airline Competition and Consumers
The ACCC’s proposal aligns with broader efforts to promote competition in the aviation industry. Historically, heightened competition has led to lower airfares, improved service quality, and increased travel options for consumers.
Recent ACCC reports indicate that domestic airline competition has evolved over the past three decades, with significant fluctuations in service reliability, pricing, and market share. The introduction of alliances like this one is seen as a mechanism to enhance consumer benefits and drive market efficiency.
Next Steps
The ACCC is currently seeking submissions from interested stakeholders regarding its draft determination. Submissions must be made by 7 March 2025, after which the ACCC will make its final decision on the authorisation.
For further details on the application process, the ACCC’s indicative timeline, and instructions on how to make a submission, stakeholders are encouraged to visit the ACCC’s public register.
