Virgin complains to competition watchdog about Qantas

written by Adam Thorn | March 24, 2020

Virgin Australia’s chief executive has written to the competition watchdog to formally complain about Qantas’s recent attacks on his airline.

In the letter, obtained on Tuesday by the Sydney Morning Herald, Virgin’s Paul Scurrah said Qantas’s actions “could cause immediate and irreparable damage to a competitive Australian air passenger transport industry”.

Mr Scurrah continued, “Virgin Australia has seen widespread reporting of public comments from Qantas and its executive team questioning directly or indirectly Virgin Australia’s financial viability and encouraging [the] government to refrain from extending any government support for the aviation industry to Virgin Australia.”

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He accused Qantas of falsely briefing journalists that Virgin Australia’s cash reserves were running low.

Mr Scurrah is thought to be referring to numerous statements by Qantas chief executive Alan Joyce urging the government not to bailout Virgin.

Speaking to Sky News on Friday morning, Joyce said, “It would be completely unfair to our sector. We’d be competing against the Australian government. Qantas couldn’t do that, it would be an unbalanced, uncompetitive environment.

“The government can’t pick winners and losers, the government has to be fair to every company. Whatever aid it’s giving to one company it must give to everyone in the sector.

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He added that the nation shouldn’t choose to look after “badly managed companies” in an apparent dig at Virgin Australia.

On Thursday, when Qantas announced it was cutting two-thirds of its staff and all but cancelling all international flights, Joyce told the media it would be “survival of the fittest” in the airline industry in tackling the coronavirus crisis.

Finally, in a phone call to staff, Joyce reportedly told workers to lobby their MPs on behalf of Qantas and said “governments are definitely not there to support a company that’s owned by Singaporeans, Chinese, Abu Dhabi and a British billionaire”, in a clear dig at Virgin.

A file image of Virgin Australia Boeing 737-800 VH-YIR at Auckland Airport. (G B_NZ/Wikimedia Commons)
A file image of Virgin Australia Boeing 737-800 VH-YIR at Auckland Airport. (G B_NZ/Wikimedia Commons)

The Virgin Australia Group, which includes the main Virgin Australia carrier and Tigerair, has grounded the equivalent of 53 aircraft so far in response to COVID-19.

At the time,  Scurrah said, “We have responded by making tough decisions, which include reducing our domestic capacity and phasing in the temporary suspension of international flying for a period of two and a half months.”

Virgin shares are currently trading at $0.055 on the ASX. On Sunday night, the airline hinted new travel restrictions will cause it to cut again.

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30 Comments

  • Phillip Ryan

    says:

    “The government can’t pick winners and losers, the government has to be fair to every company”

    The Minister for Qantas certainly didn’t hesitate picking winners and losers in the collapse of Ansett Australia in 2001. Yes, VA has had management problems with Borghetti fighting a nonsensical fight against QF when he should have been creating clear product differentiation. I shudder to think what will happen if QF becomes a monopoly. Price gouging on regional services will become de rigour.

    • Rocket

      says:

      I’m, Ansett collapsed because it was riddled with debt and inefficient and yes, NZ paying far too much helped it over the edge. However, had News retained the 50% it owned Ansett would likely have collapsed anyway, maybe at the same time or maybe a little later. Qantas at the time, prior and for all but one year since has been a profitable company. This nonsense about the ‘Minister for Qantas’ has got to stop. I think Anderson was a bit of a fool but he didn’t personally cause Ansett to be badly managed or force it to buy a dozen different aircraft types when 2-3 would have sufficed. He also didn’t force them to keep those aircraft until they were too old. Do you tho k the former staff of TWA go around calling President Bush the Minister for American Airlines or United?

      • Rocket

        says:

        ‘Um’ I typed, autocorrect changed it to I’m

    • PaulE

      says:

      In the case of regional flights, there are many communities in rural Australia that rely on REX as it is the only airline flying to those destinations. It would be disastrous if REX went under! This is where the National Party should be nurturing its constituencies and stepping up to protect them.

  • Scott

    says:

    The industry needs some clear air, and a more wholistic view rather than the narrow narrative that’s been on offer so far. Virgin, Rex, Air North and all other airlines need to be heard, and their position explained in the media, rather than one individuals opinion.
    The industry is not an industry with one player, the economy will further deeply suffer with one player in the other side. The Government needs to see through the opinions of one, for the benefit of all, ALL Australian airlines need media attention and public (booking) support on the other side.

    • Rocket

      says:

      Plenty of ‘clear air’ at the moment. Perhaps ‘needs sone time and space’.
      I think this is pathetic, Virgin complaining to the watchdog because Qantas was mean to it. There’s been worse said/written about Qantas by Virgin in the past and most of it hype and BS but to go and complain because someone has an opinion? Give me a break.

      • Scott

        says:

        Qantas is not being “mean” to Virgin they are being un competitive.
        For the ACCC to have already make statements is telling, they look for un competitive behaviour and they have already made this decision with their initial statements in the media. That’s telling.
        The government has a big 4 bank policy for a reason, we don’t need the massive Overbearing player in the Aviation industry getting any bigger.

      • Scott

        says:

        ACCC already come out and decided the comments are out of line, that’s telling.
        Qantas is 3 times the size of the next operator, and they are focused on squashing everyone else even lower, and using this pandemic – shocking.

  • John.doncaster

    says:

    It is about time Alan Joyce worried about his own airline and stop telling falsehoods about virgin Australia.If Qantas gave the great service that Virgin Australia does it might be better airline. As for Alan Joyce if he were half the man of sir Richard Branson he would try to keep the competition between both airlines. To make it better for the traveling public.

    • Ronald Spencer

      says:

      Half the man Sir Richard Branson is ? .Facts Virgin has never made a profit Qantas does fighting a subsidized Virgin their shareholders have deep pockets and use them to keep Virgin going as a feed in company and feed out for their Airlines the only shareholder Air New Zealand had the brains to bailout and cut their losses needs new management and new business case trying to be a full service Airline has failed in our small market

    • James

      says:

      No one wants to hear childish rubbish like that at a time like this. It has all to do with dollars, not the men or the apparent better service or one or the other airline. I agree with Alan Joyce. However it won’t be up to him and shouldn’t be.

      As Scott said above, there needs to be a clear approach to keeping ALL airlines running or at least in a position to run again when this virus inevitably goes away.

      Also, these measures will affect not only Qantas abs Virgin, but a whole range of GA operators. Not limited to charter, but skydiving operations, ag operators and the flight training sector.

      AA are busy at the moment, but a reminder might be in order guys to say that the industry is a lot bigger that the 2 major RPT operators.

  • Bernard

    says:

    Prefer Virgin to be nationalised than being used as a tax dodging wind up exercise by foreigners who have kept its share price low. But then REX’s situation comes into the picture. Maybe nationalise both into one organisation to ensure decent regional services and not allowing them to try running expensive international services, which are part of the undoing of previous airlines. Just a thought.

    • Craig Beatty

      says:

      What is your experience in the airline industry? And you want Qantas to have a monopoly on international services?

  • I object as an Australian taxpayer to my taxes being used to prop up VA which is 90%+ foreign owned with that billionaire urger Branson in the mix. If any money is to go into Virgin the Directors/ shareholders need to PERSONALLY guarantee any financial concessions and assurances must be given that no dividends can be repatriated osshore whilst anything is owed to Australian employees.
    We can have a duopoly again if VA goes by Qantas being forced to float off Jetstar within 12 months.
    As for REX it is fundamentally Singapore controlled. One only has to look at its top ten shareholders and nominal trustees. Any money should be personally guaranteed.

    • Craig Beatty

      says:

      Wow. Your concern for Virgin employees is heart warming. You obviously have no understanding of business or economics.

  • Peter

    says:

    Honestly Alan Joyce is right. Why would the Aussie tax payers pull the foreign companies out of this mess. VA has been so badly managed it’s whole life. Great brand and great people but it’s never been run well and as for Airnorth again a completely foreign airline that has and still is being run so poorly without any change in sight. At least VA has some change ahead with a somewhat good CEO, Airnorth has no hope the management of this company are not going to be able to save it! I say put the money into Alliance and Rex at least they have hope and good management!

  • Nadine

    says:

    Allen Who???…
    Seriously who does this guy think he is. Just a bully in my eyes. Will never fly qantas as long as I live because of him. He alone could destroy the industry.

    • Kim

      says:

      Totally agree. Qantas International has ditched Adelaide, and their traveling 100 year anniversary show won’t even come to our city. We need 2 airlines, as Qantas wasn’t a fair player after the Ansett collapse20 years ago. Some people have long memories.

  • Competing against an airline owned by the Australian government is what Sir Reginald Ansett had to do for several decades.

    • Craigy

      says:

      Your comparison is misplaced. Reg Ansett enjoyed the benefits of the two airline policy where both airlines operated the same equipment, near identical schedules and fares. When TAA wanted to purchase the Sud Caravelle, they were overruled and told to buy the same as Ansett. Because no new players were allowed into the trans national market, Ansett was guaranteed a healthy market share.

    • Rocket

      says:

      Competing?
      You’ve got to be joking. Participating in a protected, cosseted, bloated and heavily controlled duopoly. Ansett and TAA never ‘competed’, they just coexisted and they did crap like insisting Qantas prorate Internatiional fares for interline while steadfastly refusing your do the same in return with their egregiously overpriced airfares… $275 one way to Sydney from Melbourne when the same fare on any international carrier would get you to Auckland. Don’t ever use the word competition with the two airline policy in the same sentence. Reg ran at least one small airline out of business and then decided to stop flying its routes after destroying a viable company and in those days the government forced him to run it at a loss. Can’t remember the name of the airline off hand but it was a tiny Mum and Dad operation. So Reg wasn’t above doing the dirty on others.

    • Ken

      says:

      Joyce is foreign and extremely arrogant; he knows nothing about Australia, even though he no doubt by now has Australian citizenship.

  • MARK MEREDITH

    says:

    Joyce is looking after his company, not the best look at this time, but this is a new world.
    Who will be standing at the end??

  • Dale

    says:

    Why should the Australian Tax payer bail out a company largely owned by foreign Government enterprises? AJ has a point here….. hate on QF all you want, but it doesn’t change the fact that their revenue and profits are benefiting all Australians through the taxation system. Rex is the airline we should all be worrying about most, and the government should work hard to stabilise its current situation.

    • Jackson

      says:

      Firstly, Qantas doesn’t pay corporate tax (which is ridiculous given how much money they make). Secondly, they should bail them out within reason to keep the competition – no competition means the consumer pays the price. Whilst I agree Alan Joyce has a point, Virgin Australia is more crucial to Australia than many think and I’d rather the government bail them out so we pay lower airfares in the long term rather than a Qantas monopoly – we see how much they charge on Regional routes when there is no competition, we can’t let that happen to our mainstream routes.

    • Scott

      says:

      Dale your points are totally contradictory,
      REX is 100% foreign owned, yet Virgin is not, so your whole point doesn’t make sense to support Rex?
      Where do you think the 10000 Virgin Australia employees personal taxes go?
      The 1500 REX employees taxes go?
      The 500 Air North employees taxes go?
      The 1500 Skippers, Cobham employees taxes go?
      The current employees have paid huge amounts of tax for 20-40 years.
      All to the benefit of the Australian society.

      News flash – Qantas has not paid more than a few cents on billions of profits (company tax) for more than 7 years, due to the accounting 2.5b write off. The “revenue” hasn’t benefited any Australians outside the company whatsoever.
      I call on the government to see though this campaign and support the broader Australian industry, we need an industry not one massive Qantas operation. We all know what that looked like with Ansett failed and the implications on the traveling public and economy.

  • Agentgerko

    says:

    If QF/Joyce get their way then QF will be the only carrier for intrastate, interstate and international. No Virgin. No Rex. They’ve proven this already by bullying Rex off a number of routes and buying Alliance to bully Virgin Regional. I understand the theory that nobody wants to bail out a mostly foreign owned company but it may be a choice of that or face a total QF monopoly. I don’t mind companies being competitive but QF has long been the bully of Australian aviation as shown by how few regional airlines survive and how no continental Euro carriers even fly here any more. I thought Dixon was a tough guy but Mr Joyce is bullyboy king.

    • Kim

      says:

      Exactly. Just look at what Qantas Link has done to Rex on the Adelaide/Kangaroo Island route. Even before this Virus Rex announced it was having to cut back its Kangaroo Island flights. Too much capacity?

  • Winston

    says:

    I am appalled by the many Negative comments about Airlines in Australia.Lets just get on with the job so that all airlines will be viable when the dust settles.Pointing the finger at anyone never gets positive attitudes and we are a continent with great people who have stood by each other in difficult times, but this literally was something NOBODY envisaged and with it being Globally destructive, lets band together for everyone’s sakes.

  • Bill O'Really

    says:

    Big Joy Boy has all Australians interests at heart. 24 million of them. Lets praise this lord. And pass the tambourine for Joy Boy, saviour extraordinaire, with only OUR interests at heart. Oh Yeah.

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