I don’t think this should surprise anyone given how industry dynamics are evolving, but Virgin Australia and Etihad Airways plan to end their longstanding partnership.
In this post:
Virgin Australia & Etihad cutting ties as of June 2025
As of June 1, 2025, Virgin Australia and Etihad Airways intend to fully discontinue their partnership. With this, we’ll see the airlines end their frequent flyer reciprocity, codeshare agreement, and even interline agreement. Those with travel already booked as part of this arrangement will see no changes to their travel plans.
Etihad has been flying to Australia since 2007, and has had a partnership with Virgin Australia dating all the way back to 2010. In 2012, Etihad even bought a stake in Virgin Australia, which was back when Etihad was actively pursuing its strategy of investing in foreign carriers to build its own global alliance, which ended horribly.
Etihad’s stake in Virgin Australia went to zero when the airline entered voluntary administration in 2020, as the company is now under new ownership.
So, why would Virgin Australia and Etihad end their partnership, when it feels like this should be mutually beneficial? Keep in mind that Qatar Airways is in the process of buying a 25% stake in Virgin Australia.
Qatar Airways has quite the ambitious goals for this partnership, as Qatar Airways hopes to help Virgin Australia resume long haul flying, by operating wet leased flights between Australia and Doha, to get around the current flight limits that exist with the bilateral agreement.
As part of this agreement, Virgin Australia has committed to having Qatar Airways be its sole partner in the Middle East. Historically, Virgin Australia has gladly partnered with a bunch of foreign airlines, given that it just generated extra business for the airline, with limited direct competition. However, clearly the airline is now pursuing a new strategy.
This will leave Etihad without a partner in Australia
The Australian aviation market isn’t all that competitive, at least on the domestic side. You have Qantas, which belongs to the oneworld alliance, and has a close partnership with Emirates. Then you have Virgin Australia, which has historically partnered with a variety of airlines, but which is now working more exclusively with Qatar Airways.
In terms of connectivity within Australia, this makes the situation quite tricky for many airlines. Etihad flies to Melbourne (MEL) and Sydney (SYD), but will struggle with connectivity within the country. I can’t imagine Qantas wants to work with Etihad, and now the carrier’s partnership with Virgin Australia will end.
So, what does that leave? Rex was starting to grow quite a bit in Australia, but was losing too much money, and has now entered voluntary administration, and dumped its Boeing 737s. The airline no longer has a substantial network within Australia, aside from small markets.
Admittedly most traffic to Australia is to the major markets served directly by Etihad, but still, this does seem like it presents a new challenge for the airline.
Bottom line
Virgin Australia and Etihad intend to discontinue their partnership as of June 2025. The airlines have partnered for years, and Etihad even used to own a stake in Virgin Australia.
This development comes as Qatar Airways is purchasing a stake in Virgin Australia, with the intent of Qatar Airways being Virgin Australia’s only partner in the region, and Virgin Australia even potentially resuming long haul flights.
This development doesn’t come as much of a surprise. It’s just interesting how early this is being announced, before the Qatar Airways investment has even been finalized. It also puts Etihad in a tough spot when it comes to connectivity within Australia.
What do you make of Virgin Australia and Etihad cutting ties?
Having flown Virgin Australia on a regular basis. I loved spending my points on etihad heading back to the uk and enjoying the lounge on the connection at Abu Dhabi ( maybe even more than the agreement with Singapore Airlines st the time )
I think Qantas will interline with just about anyone. A sale is a sale, after all.
I"m sure Etihad will still have interline agreements with both Virgin and Qantas which will allow them to add on connections where needed within Australia after/ before flights to Abu Dhabi. They all do. Try booking a flight on United to some place like Adelaide and, even thought UA is somewhat close with Virgin, you'll still see them offer a connection from sydney to adelaide on Qantas. Similarly, even though Qantas is close with AA,...
I"m sure Etihad will still have interline agreements with both Virgin and Qantas which will allow them to add on connections where needed within Australia after/ before flights to Abu Dhabi. They all do. Try booking a flight on United to some place like Adelaide and, even thought UA is somewhat close with Virgin, you'll still see them offer a connection from sydney to adelaide on Qantas. Similarly, even though Qantas is close with AA, you'll still see them selling connections on United from their west coast gateways to several destinations.
Just because they dont have a partnership doesnt mean the interline agreement ends and they dont use it to help fill up their planes. Learn that.
@ Jason -- Not with Virgin Australia, at least aside from irregular operations:
“Qatar Airways will become Virgin Australia’s exclusive interline, codeshare and loyalty partner headquartered in the Middle East or Türkiye (excluding interline for passenger re-accommodation purposes).”
Qatar and Qantas are part of OneWorld, so why go after Virgin Australia? Or are Qantas and Qatar not the best of friends?
@ Evan -- There's a lot of very bad blood between Qatar and Qantas, as Qantas has for years done everything it can to block Qatar's expansion in the country. That's because Qantas (selfishly) wants to limit foreign competition, and is most focused on its Emirates partnership.
There is also more to it. Qantas is largely propped up by its protectionist Australian government. And Qatar Airways had a human rights violation incident against Australian women dating back a few years ago. The Australian government very much dislikes the country of Qatar (and thereby their government funded airline) since that matter didn't get resolved in favor of the Australian women.
Etihad has always struck me as being very weak in Australia, though PER seems to be an on-and-off discussion, but nothing has come to fruition yet. Etihad has never served NZ, which is fair enough, since it’s too long and thin. Advantage QR!
Don't think Etihad fly to Brisbane (BNE) rn. So it is just Sydney and Melbourne that are their only Aussie routes
@ DaBluBoi -- Good catch, thank you. Fixed!
They did but only back in the day