Etihad Ownership of Virgin a Threat to Qantas' Future

6th Jun 2012

The flag carrier of the United Arab Emirates recently acquired a 4% stake in Virgin Australia. The purchase gives the Abu Dhabi-based airline the chance to explore business opportunities in Australia's travel industry, and probably gain control of the country's domestic travel market. Some sources say that the intention of the carrier's initial entry into the domestic travel business would eventually take a majority control on the continent's airline industry.

There are fears that the Etihad's stake in a local carrier would soon throw Qantas out of business, especially in the domestic market.

According to James Hogan, CEO of Etihad Airways, the carrier is contemplating on acquiring more stakes in Virgin Australia.

Etihad's stake in Virgin Australia may be minor for now, but it might give workers' union the reason to air their gripe on the present administration.

Paul Howes, the national leader of Australian Workers? Union, has warned the other day that the aviation industry in the country may succumb to a serious crisis if the Middle Eastern carrier would be allowed to acquire more stakes in a domestic airline.

Mr. Howes said that the ego fight between royal families of these emirates may unwittingly cause the aviation workers of the country to become jobless.

The major airlines in the Gulf region, specifically the bitter rivals Emirates and Etihad Airways, are now on a race to create a global impression in the aviation industry through acquisitions of various carriers across the globe. To cut down costs, various units of the operations are often moved back to the Gulf leaving local workers jobless.

Mr. Howes allegedly knew a long time ago Virgin's plan when its domestic and international operations were split into two separate entities.

According to industry experts, the legislation that prevents Qantas from getting controlled by a foreign entity makes the airline unable to compete head-on with Etihad which is owned and controlled by Abu Dhabi's royal family.

Critics lashed out at the government for failing to act on the acquisition by Etihad Airways saying it should put national interest first before anything else.

This acquisition may put the Australian aviation industry to a test, often dangerously, to fend itself off from foreign domination. Qantas, currently the country's largest airline, is poised to make its stance against the government's failure to prevent the acquisition.

Though the stakes purchased by Etihad Airways was that of the domestic operations, critics argued that it could also affect adversely the international routes of both airlines.

Australian Senator Barnaby Joyce has said that the flag carrier is put at risk with Etihad's acquisition.