Qantas objects to Virgin restructure

Qantas objects to Virgin restructure
By admin


Qantas has objected to Virgin Australia’s plan to split its domestic and international operations, arguing it could put the carrier in breach of numerous Air Service Agreements (ASAs).

The flag carrier insisted the restructure created a “real risk” of the carrier operating as an Australia-designated international airline but with foreign owners pulling the strings.
“Qantas is very concerned that the proposed restructure is likely to result in foreign persons having effective control of the day-to-day operations of Virgin Australia International Holdings (VAIH),” Qantas general counsel Brett Johnson said.
He referred to Virgin’s admission that the newly-formed International division entity would be “comprehensively serviced, managed and funded” by domestic arm Virgin Australia Holdings (VAH).
If foreign shareholding of VAH exceeded 49% – which would be permitted under the new structure – it could no longer be considered an “Australian Person”, he contended.
This would mean VAIH would fall under foreign control, putting it in breach of the Air Navigation Act (ANA), which limits foreign ownership of Australian international airlines to 49%.
The objection was submitted to the International Air Services Commission in response to Virgin’s request that its capacity on the Indonesia route be transferred from VAH to VAIH.  
Qantas further urged the IASC to undertake a comprehensive public review to ensure VAIH complied with all relevant ASAs.
Virgin Australia created VAIH to hold its international airlines as a method of sidestepping regulations and clearing the way for further foreign investment in its domestic operations (Travel Today, February 23).
A statement from the airline said: “The VAH board of directors and management believe that the proposed new structure is the best option for Virgin Australia and its stakeholders to ensure long-term growth and access to capital for its business.”

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