Virgin Australia and Qatar Airways have struck a deal. Image – James D. Morgan-Getty Images.

The Australian Competition and Consumer Commission this week said it is proposing to grant authorisation to Virgin Australia and Qatar Airways, allowing them to engage in cooperative conduct under an integrated alliance for five years.

Virgin Australia and Qatar Airways intend to commence 28 new weekly return services between Doha and Perth, Brisbane, Sydney and Melbourne. They will commence the additional services from Sydney, Melbourne and Brisbane in June 2025, with the Perth services to follow in November 2025.

Virgin Australia is proposing to use Qatar Airways’ aircraft and crew to operate the new services under ‘wet lease’ arrangements.

And the alliance could also boost Australia’s European and United Kingdom trade, with Doha and Qatar Airlines providing an important and in-demand connection between Australia and Europe.

ACCC Commissioner Anna Brakey said the commission considered that the proposed cooperative conduct would likely result in several public benefits including providing enhanced products and services for air travellers which would include increased choice of international flights, with additional connectivity, convenience and loyalty program benefits for consumers.

The new air services are subject to final regulatory approvals by the ACCC and other government bodies. The ACCC is now seeking feedback on this draft determination before it makes a final decision.

Extra capacity would put pressure on airfreight costs

Virgin Australia submitted to the ACCC that the additional capacity would put downward pressure on freight costs, in circumstances where low freight costs are integral to the competitiveness of Australia’s exports.

The extra flights would also assist to alleviate the shortage currently experienced in Western Australia, with Western Australian airfreight exporters currently limited to one Qatar flight per day, and 4–5 metric tonnes per exporter, split between three exporters.

Virgin Australia said Qatar is a top three trading partner for Australia in the Middle East and North Africa region, accounting for 8 percent of beef and 13pc of sheep exports, with two-way goods and services trade worth approximately AUD$3.4 billion in 2023, with annual growth of 10.2 percent.

Virgin Australia said an increase in capacity and frequencies between Australia and the Middle East would allow more freight capacity and exports and assist to alleviate the shortage currently experienced in Western Australia along with the growing demand for exports between Australia and the Middle East more generally. This would have the flow on effect of stimulating and supporting the profitability of Australian farmers and the cost of living pressures they are facing, the airline told the ACCC.

“Further, the applicants intend to operate B777 aircrafts on the additional frequencies which has more than double the cargo space compared to A380s, which Qatar Airways currently uses on its existing daily Perth service, meaning that the additional Perth frequency will open up more than a doubling of freight capacity for Western Australian exporters.”

Airfreight boost will be welcome

Commenting on the proposed alliance between Virgin Australia and Qatar Airways, Global AgriTrends analyst Simon Quilty said Australia would benefit from any increase in airfreight capacity into the Middle East and then into Europe.

He said the Middle East had become Australia’s largest regional market driven by airfreight carcasses and bone-in product.

He said the sheer volume of product that is airfreighted out of Australia is impressive.

“Full credit to companies like Midfield that have grown that market and have truly given is the most important outlet for light lambs in Australia that we’ve seen in years.”

Episode 3 analyst Matt Dalgleish said the alliance would be a great result if it delivered on increased airfreight flights into the Middle East and North Africa.

Alliance adds much-needed capacity and competition – EABC

The European Australian Business Council said travel services for business and leisure, and air cargo, are of critical importance to Australia-Europe trade and investment flows.

“As a whole, annual trade between Australia and the European Union and the United Kingdom is valued at close to $A140 billion, and total two-way investment stocks now stands in excess of $A3 trillion (Source: DFAT).

“This enormous economic relationship requires much-needed additional capacity for passenger and freight movements, including increased diversity of fast and efficient connections to a wider range of European ports (among other regions),” the council sunmission said.

“The withdrawal of European carriers serving the Australian market has historically led to an increased concentration of services provided by carriers based in traditional hubs in Asia, and the rapid development of new services through hubs in the Middle East.

“Virgin Australia’s application for additional capacity and codeshare arrangements represent an extension of the now well-established practice of alliances by Australian airlines serving the international market, adding much-needed capacity and competition. “