Etihad has announced that they are pulling the plug on their partnership with Virgin Australia. This comes a couple of months after Qatar’s announcement to acquire a 25 per cent stake in Virgin.
Etihad’s Decision to Split from Virgin Australia.
This past Monday, Etihad announced that they will be ending their partnership with Virgin as of the 1st of June, 2025. The partnership included a codeshare between the two airlines and an intertwined rewards system. This means that by mid-next year, Etihad customers will no longer be able to book Virgin flights through Etihad’s booking system and be able to earn points on Virgin flights.
Through the statement they released on Monday, Etihad comments on the decision to end the partnership as it,
“Reflects a divergence in the strategic direction of the respective airlines”.
In addition, the statement reassures Etihad customers about the airline’s connection to Australia. That although their partnership with Virgin is coming to an end, it does not mean that Etihad will no longer service Australian customers:
“Etihad Airways remains dedicated to serving Australia, as it has since 2007… For Summer 2025, the airline will increase its flights to Sydney and Melbourne, offering Australian guests an exceptional flying experience, loyalty benefits, and connections to its expanding global network.“
How does Qatar play a factor in the ending of the partnership?
Qatar and Virgin have had a relationship since 2022, when they became codeshare partners. However, last month, Qatar and Virgin announced their intention to acquire a 25 per cent stake in the Australian airline.
Etihad faces significant competition from Qatar. Both their headquarters are located in the Middle East, and they offer flight routes to and from the Middle East. Qatar’s attempt to claim a stake in Virgin seems to be the divergence in the strategic direction that Etihad said in its statement. Being a codeshare partners is one thing, but if Qatar is to have a major stake in Virgin it will shift the direction of their plans.
The Australian Foreign Investment Review Board and the Australian Competition and Consumer Commission (ACCC) are currently considering and deciding on the approval of Qatar and Virgin’s stake. However, if it were to be approved this would greatly benefit both airlines.
What does Virgin get out of this?
What is being proposed between the two airlines is a ‘wet lease’ agreement. A ‘wet lease’ is when an aircraft is leased to an airline, this lease includes the aircraft itself as well as full crew and any relevant services. In a statement from Virgin about Qatar acquirement, they announced what the ‘wet lease’ means in terms of future flights:
“This cooperation will enable Virgin Australia to launch flights from Brisbane, Melbourne, Perth and Sydney to Doha, connecting seamlessly into Qatar Airways’ global network.”
These flight routes will allow Virgin to expand its international connections. Currently, they fly domestically within Australia and offer international flights to Japan, Bali, New Zealand, Fiji, Vanuatu and Samoa. Having flights in and out of the Middle East will eventually allow them to offer their customers destinations across the globe.
What does Qatar get out of this?
For Qatar, if it is approved and they can acquire the 25 per cent stake in Virgin it means they will be able to expand their business in Australia.
Last year, Qatar applied to double weekly services to the four major airports in Australia as they had exhausted their capacity at these airports. In response, the transport minister Catherine King denied the request and gave eight reasons as to why:
- Decarbonising the sector
- National interest
- Protecting local aviation jobs
- The local aviation industry’s post-Covid recovery
- Qantas’ investment in a new aircraft
- Qantas’ long-term sustainability
- The Qatari government owns the airline
- The 2020 incident at Doha airport.
Qatar did not agree with the reasons behind the rejection of adding more flights. However, there was nothing they could do about it as the government stuck with their reasons and never gave permission for additional flights.
Yet, this stake in Virgin will allow them to sidestep this rejection. Qatar is already at capacity for flights in major Australian airports, but Virgin isn’t. Through the ‘wet lease’ agreement, Qatar will supply long-haul aircraft to Virgin for their planned Doha routes. This way, Qatar can expand its business and add more flights to Australia without violating the restrictions the Australian government has put in place.
Ultimately, Qatar and Virgin are still waiting on the approval of this stake from Australia’s Foreign Investment Review Board and the ACC. What are your thoughts on this potential deal? And do you think Etihad was right to cut their partnership with Virgin? Let us know in the comments or on social media.
