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United States Airports back Virgin’s Qatar wet-lease despite codeshare concerns
The peak body for Australia’s airports has come out in support of Virgin Australia’s Qatar deal, but expressed reservations about codeshare exclusivity between the two airlines.
In the Australian Airports Association’s (AAA) submission to the ACCC on the proposal, CEO Simon Westaway said that the plan for Virgin to wet-lease Qatar Airways aircraft would add extra international capacity for both passengers and cargo.
As the flights would be operated under the banner of an Australian carrier, they could effectively partially circumvent the restrictions under Australia’s bilateral air service agreements with Qatar, allowing up to another 28 flights per week between Doha and the major gateways.
“The partnership is expected to yield immediate and tangible benefits, particularly on key routes between Australia and the Middle East, UK, and Europe,” wrote Westaway.
“By adding 28 new weekly flights between Australia and Doha, the Virgin and Qatar partnership will directly benefit consumers through lower fares, as pricing data historically indicates that fare levels on routes with higher carrier competition are more accessible and competitive.”
Westaway was concerned, however, about the impact on codesharing: under the deal, which would also see Qatar Airways take a 25 per cent stake in Virgin, Qatar and Virgin would become exclusive codeshare partners on flights to the Middle East, Europe and Africa.
This would likely end Virgin’s long-standing codeshare partnership with Qatar’s Abu Dhabi-based rival Etihad, as well as with South African Airways and with Singapore Airways flights outside of Asia.
“This restriction could limit Virgin Australia’s ability to partner with European (including Turkish) and African based carriers, potentially reducing competition and choice for passengers travelling to these regions,” he wrote.
“With Virgin being one of only two Australian-based airline groups for overseas carriers to partner with, limiting Virgin’s options could be detrimental in future. This is particularly the case where the other major Australian-domiciled airline, the Qantas Group, may have a limited incentive to partner with other airlines due to its existing alliance with Emirates.
“The AAA would support a narrowing of those restrictions to only apply to airlines based in the Middle East.”
While Qantas will not oppose Qatar taking a 25 per cent stake in Virgin, the Flying Kangaroo – which came out against the expansion of Qatar flights into Australia last year – is expected to make an ACCC submission of its own opposing the wet-lease, according to the Australian Financial Review.
