Qatar Airways will buy a 25 per cent stake in Virgin Australia after an agreement was reached between the Australian airline’s owner, Bain Capital, and the Gulf carrier.

The purchase for an undisclosed amount will need approval from the Foreign Investment Review Board and the Australian Competition and Consumer Commission (ACCC).

Under the proposed deal, Virgin Australia plans to launch flights from Brisbane, Melbourne, Perth and Sydney to Doha, hoping to achieve its “measured entry” into long-haul international flying by mid-2025.

The flights would be provided under a “wet lease” agreement with Qatar, which outlines when an airline loans an aircraft to another carrier to temporarily increase capacity.

Jayne Hrdlicka, Virgin Australia’s chief executive, said the deal would allow the airline to better compete within Australia and expand its international flight offerings.

“It means that we’ve got an important shareholder who has scale that we don’t have, who has expertise that we don’t have,” she told News Breakfast.

“That can help us compete better domestically by giving us access to the scale, to purchase things more cost effectively and to invest in technologies, invest in sustainable aviation fuel.

“To do things that we otherwise wouldn’t be able to afford to do as quickly and give us the chance to compete better domestically.

” … And also the ability to put our toe in the water and add services between Australia and Doha, which opens up 107 new destinations for Australians with one stopover in Doha.”

The Gulf carrier was last year blocked by the Albanese government from a request to fly additional services into Sydney, Melbourne, Brisbane and Perth.

The airline had applied to run an extra 21 flights into Australia a week — seven each to the three major capital cities — but it was rejected by the government.

The Coalition, tourism sector and business groups were critical of the decision, which the government repeatedly defended as being made in the public interest.

Qantas later confirmed it had written a letter to the government in October 2022 about Qatar Airways’s proposal to run more flights in Australia, saying it would distort the market.

The airline has been contacted for comment.

ACCC will consider Qatar deal and ‘impact on competition’ 

When asked about the proposed deal on Tuesday, Treasurer Jim Chalmers, who is the decision-maker on foreign investment applications, said it would not be appropriate for him to pre-empt the process.

He said the competition watchdog was yet to receive an application. The ACCC has since confirmed to the ABC that it has been notified of the potential deal.

“My role in it is on the Foreign Investment Review Board, and when I get that advice I will consider it in the usual methodical way,” Mr Chalmers said.

He added that, “more broadly”, the government wants to see “a strong, competitive airline industry that delivers for consumers”.

Qantas and Virgin Australia together control about 90 per cent of the country’s domestic aviation market.

An ACCC spokesperson said in a statement it would consider the impact of the deal on competition “by both the acquisition of 25 per cent of Virgin Australia and the proposed cooperation between the airlines”.

The Transport Workers’ Union (TWU) believes the proposal will be an “opportunity for the airline to expand and take on the aggressive competition of Qantas”.

However, it has also called for Qatar Airways to “recommit” to Virgin workers if the new deal proceeds.

The TWU, which represents many of Virgin’s staff, said it wanted commitments to address its reservations about Qatar Airways’s influence over members’ jobs and working conditions.

“It’s crucial that the workers who made sacrifices to get Virgin Australia flying again are those to benefit from the opportunities this deal provides in an industry dominated by aggressive competition,” TWU national secretary Michael Kaine said.

What the new proposal could mean for Australian travellers

Qatar Airways’s proposed partial stake in Virgin expands upon the existing flight-sharing arrangement between the two airlines.

Aviation writer Geoffrey Thomas said the deal was an “excellent move”, which would impact competition in Australia’s aviation space.

“It’ll strengthen Virgin Australia to no end and ensure we have a robust competitor to Qantas,” he told the ABC.

“And it’ll increase competition for especially longer international journeys. It’s a win-win.”

Ms Hrdlicka said Virgin’s proposed long-haul services were expected to generate $3 billion to the Australian economy through incremental visitor flows over the next five years.

Virgin Australia was one of the first major airlines in the world to go bust during the COVID-19 pandemic, and went into voluntary administration one month after the federal government closed Australia’s borders in March 2020.

But it was bought by American private investment firm Bain Capital for $3.5 billion including liabilities and came out of administration in November that same year.

Since then, Virgin Australia has cut back the number of international routes it operates.

Bain Capital had been exploring an initial public offering (IPO) of Virgin Australia, but the plans were delayed last year.

Ms Hrdlicka said the new deal would give the airline an “anchor” to begin to think about “opening up the opportunity for public investment and an IPO”.

“That’s over time,” she added.

Qatar Airways Group chief executive Badr Mohammed Al-Meer described the alignment of the two airlines as “significant” and the relationships as “deep”.