Virgin Australia faces inflexion point as it awaits partnership ruling and ponders CEO choice

Virgin Australia is in a state of regulatory and leadership limbo, with key decisions looming that will shape the next phase of the airline's development.

One of the changes in the works for Virgin Australia is its proposed partnership with Qatar Airways, which represents a major piece in the airline's ongoing efforts to reshape its post-restructuring business.

The market, fleet and network implications of this enhanced partnership were discussed in this CAPA - Centre for Aviation analysis in Oct-2024, after the deal was announced.

Since then, the ball has largely been in the regulators' court. Multiple Australian authorities and government branches are weighing in on the complex proposed arrangement between Qatar Airways and Virgin Australia.

While there is still some way to go on this front, positive signs for the airlines have emerged recently.

Meanwhile, Virgin Australia has been considering options for replacing CEO Jayne Hrdlicka when she steps down. However, this process has been complicated by political and union involvement.

Summary

• ACCC draft ruling on Virgin Australia-Qatar Airways wet-lease arrangement is due in Feb-2025.
• Responses to IASC queries have been positive for the proposed partnership.
• FIRB is still considering Qatar Airways' stakeholding in Virgin Australia.
• Union involvement has prompted airline statement about one CEO contender for Virgin Australia.

ACCC draft decision could be coming soon, and early indications are promising

Qatar Airways and Virgin Australia are looking to strengthen their cooperation, and one notable feature would result in the Gulf airline wet-leasing aircraft for Virgin Australia to operate long haul codeshare flights from multiple Australian points to Doha.

The details were included in CAPA - Centre for Aviation's previous analysis, but basically Virgin Australia intends to operate the wet-lease flights to Doha from Sydney, Melbourne and Brisbane from Jun-2025, and from Perth in Nov-2025.

The major approval for this must come from the Australian Competition and Consumer Commission (ACCC).

The ACCC has indicated that a draft determination is likely to be issued sometime in Feb-2025, with the final decision expected in Mar-2025 or Apr-2025.

In Nov-2024 the ACCC granted interim authorisation in advance of the draft decision.

This step allows the airlines to begin preparations while regulators fully consider the proposal. It gives them time to begin planning for the services, and to start marketing and selling them.

However, the ACCC will still assess the benefits and possible public detriments of the proposal before making its formal ruling.

Virgin Australia and Qatar Airways agreed to a court-enforceable undertaking that if the final decision rejects the airlines' proposal, customers who have already booked will be fully refunded, or reaccommodated.

So while the actual decision could still go against the airlines, gaining interim authorisation is a positive sign.

In separate correspondence to Australia's International Air Services Commission (IASC) on 23-Dec-2025, the ACCC noted that based on its work so far, the proposed partnership "appears likely to result in public benefit".

The IASC also has a role to play in moving the process forward

On a separate track, the IASC is considering Virgin Australia's application for the allocation of 28 weekly frequencies each way under the existing Australia-Qatar bilateral aviation agreement. These would be operated by wet-leased Boeing 777-300ERs.

On 28-Jan-2025 the IASC wrote to the ACCC to ask its advice on the proposal - in particular, whether the proposed conduct would be covered by the bilateral.

The transportation department subsequently replied to the IASC to confirm that the Qatar Airways-Virgin Australia wet-lease arrangement would be allowed under existing regulations and bilateral agreements.

Again, a positive (but not definitive) sign.

In its reply, the transportation department also noted that Virgin Australia must still apply to the department for timetable approval to operate the wet-lease services. And that can only be granted if the airline has an allocation of capacity from the IASC.

Gaining approval for Qatar Airways stake will be key to cementing the partnership

One of the major aspects underpinning the Virgin Australia-Qatar Airways partnership is Qatar Airways' proposal to purchase a 25% stake in Virgin Australia from its current owner, Bain Capital.

This transaction must be approved by the Foreign Investment Review Board. There is potential for this decision to be delayed by the upcoming federal election process, so the airline will, no doubt, be hoping to gain approval before that.

The sale harks back to Virgin Australia's pre-bankruptcy ownership structure, when multiple overseas airlines had stakes in the airline.

Of course, a key difference is that Qatar Airways would be the only airline stakeholder; at least, initially. This would avoid conflicting interests or aims among multiple airline owners.

Virgin Australia's CEO selection has become controversial as union inserts itself into the process

While the delicate regulatory dance is under way regarding the Qatar Airways proposal, Virgin Australia is also hunting for a new CEO.

The current CEO, Jayne Hrdlicka, announced in Feb-2024 that she would be stepping down after four years at the airline's helm.

No retirement date was set, and comments from Ms Hrdlicka and the board suggested that she would stay on while her successor was chosen.

That process has now stretched on for a year, and may continue for some time yet.

Chief Customer and Digital Officer Paul Jones was believed to be the frontrunner to replace Ms Hrdlicka, but the airline's board took the unusual step of announcing on 7-Feb-2025 that Mr Jones would not be the next CEO.

This followed highly publicised opposition to Mr Jones' potential selection from the Transport Workers Union, which urged the owners (Bain) not to choose him.

The TWU went so far as to hint that it would not support the Virgin Australia-Qatar Airways wet-lease plan if Mr Jones was selected.

There was also a whiff of political pressure. When asked about Mr Jones, Minister for Employment and Workplace Relations Murray Watt made a veiled but unmistakable suggestion that Virgin Australia should pick someone else.

Union opposition to Mr Jones stems from the fact that in his previous job at Qantas he was linked to a decision to outsource ground workers' roles, which was later ruled to have broken labour laws.

It remains unknown whether Virgin Australia would have selected Mr Jones absent the union and political opposition.

But what is clear is that these criticisms forced Virgin Australia to comment publicly, and rule him out of contention.

Political aspects complicate the process, but could work in Virgin Australia's favour

The Qatar Airways partnership is very important for Virgin Australia and offers benefits for both airlines.

Although this proposal has multiple regulatory hurdles to clear, the signs so far are in its favour.

From a political standpoint, it would be tough for the government to deny the partnership or the additional wet-lease international services.

The government copped a lot of public and media criticism for a previous decision to deny Qatar Airways' request for more flights to Australia, and rejecting the airline again would likely result in even more bad press in an election year.

So the most likely outcome appears to be that the deal will be cleared over the next few months.

Virgin Australia would, no doubt, like to have its CEO selection locked in around the same time as the Qatar Airways deal is approved, but it is far from certain that will occur.

It remains unclear how much the union involvement has played a role in Virgin Australia's CEO selection considerations, but it is plainly a factor.

Unions should not have this much influence over an airline's CEO selection, but that reflects the current political environment for airlines in Australia.

Airlines are very much in the media and political crosshairs at the moment - and while this has probably gone further than is justified, it is the reality they must contend with.