On Monday, Etihad Airways announced its decision to terminate its long-standing partnership with Virgin Australia, effective June 1, 2025. The partnership, which included codeshare agreements and an integrated rewards program, allowed customers to book Virgin flights through Etihad’s booking system and earn loyalty points on Virgin-operated routes. With the dissolution of this agreement, these benefits will no longer be available to Etihad passengers by mid-2025.
In an official statement, Etihad cited a shift in strategic priorities as the primary reason for ending the collaboration. The statement highlighted that the decision “reflects a divergence in the strategic direction of the respective airlines.” However, Etihad assured its commitment to the Australian market, emphasizing that the termination of the partnership does not signify a reduction in its Australian operations.
“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,” the airline’s statement read.
The Role of Qatar Airways
A significant factor in the termination of the partnership is the evolving relationship between Virgin Australia and Qatar Airways. The two airlines have been codeshare partners since 2022, but last month, they announced a proposal for Qatar Airways to acquire a 25% stake in Virgin Australia.
Etihad and Qatar Airways, both based in the Middle East, compete directly on several routes. Qatar Airways’ potential investment in Virgin Australia represents a significant shift in Virgin’s strategic direction. While codeshare partnerships are common, ownership stakes bring deeper collaboration and alignment, which likely contributed to Etihad’s decision to sever ties with Virgin.
The proposed acquisition is currently under review by the Australian Foreign Investment Review Board and the Australian Competition and Consumer Commission (ACCC).
Virgin Australia’s Strategic Expansion
As part of the proposed agreement, Virgin Australia plans to enter into a “wet lease” arrangement with Qatar Airways. Under this lease, Qatar Airways would provide aircraft, crew, and associated services for Virgin-operated routes. Virgin has announced plans to launch flights from Brisbane, Melbourne, Perth, and Sydney to Doha, enabling connections to Qatar Airways’ extensive global network.
This move represents a major step forward for Virgin’s international expansion. Currently, the airline operates domestic routes within Australia and limited international flights to destinations such as Japan, Bali, New Zealand, and Fiji. Establishing connections to the Middle East would significantly broaden Virgin’s global reach and appeal to a wider customer base.
Qatar Airways’ Strategic Advantage
For Qatar Airways, the acquisition of a stake in Virgin Australia provides a critical opportunity to strengthen its presence in the Australian market. In 2023, Qatar Airways faced a setback when the Australian government denied its request to double weekly services to the country’s four major airports, citing reasons such as protecting local aviation jobs and supporting the post-COVID recovery of the Australian aviation industry.
The government’s decision left Qatar Airways operating at full capacity within the constraints of its existing permissions. By partnering with Virgin Australia, Qatar Airways can bypass these restrictions. Virgin, which has not reached capacity at Australian airports, can operate additional long-haul flights using aircraft supplied by Qatar Airways under the wet lease arrangement.
This partnership would allow Qatar Airways to expand its reach and capacity in Australia without directly contravening the government’s limits. Meanwhile, Virgin Australia gains access to long-haul aircraft and the ability to connect its passengers to Qatar Airways’ extensive network, offering significant mutual benefits.
Etihad Airways’ decision to end its partnership with Virgin Australia underscores the complexities of the competitive airline industry. While Etihad remains committed to serving the Australian market independently, Qatar Airways’ strategic alliance with Virgin signals a new chapter for both airlines.
If approved, the collaboration between Qatar Airways and Virgin Australia could reshape the competitive landscape, offering expanded options for Australian travelers and strengthening Qatar’s foothold in the region. As the Australian regulatory bodies deliberate, the outcome will likely have far-reaching implications for the future of aviation partnerships in the region.
