Etihad, Virgin Are Tourism Australia’s New Marketing Partner to Replace Qantas

Qantas's loss is the gain of Middle Eastern air carrier Etihad Airways and Australia's second major airline, Virgin Australia, after the two aviation companies signed three-year marketing deals with Tourism Australia.

The new deals, which cost a total $18 million, replace the old agreement set aside by Qantas in response to the suspicion by Alan Joyce, the company's chief executive, that Geoff Dixon, the chairman of Tourism Australia and a former Qantas official, is behind the move to influence decision-making in the flag carrier.

When Mr Joyce terminated Qantas' deal with the tourism body in November, it was the last year of their three-year agreement worth $44 million. Qantas provided $5 million yearly in cash to Tourism Australia as well as tickets for media and trade events.

Mr Joyce said Qantas will continue to support local tourism but would channel the funds to state tourism bodies.

Under the $6 million deal between Etihad and Tourism Australia, marketing plans would be developed to target tourists from the Middle East, United Kingdom and Europe.

"In just five years of flying to Australia, Etihad Airways has demonstrated a strong and growing commitment to its Australian operations," Tourism Australia Managing Director Andrew McEvoy said in a statement.

"Etihad Airways and Tourism Australia have already started planning a major campaign for the first half of 2013 - together with Virgin Australia - in order to leverage the synergies of the airlines' joint networks and cooperative marketing spends," Etihad Chief Executive James Hogan said.

To indicate the importance of its Australian routes, Etihad has dedicated 16 per cent of its global seat capacity to Australian destinations and poured major investments in community assets Down Under such as the Etihad Stadium in Melbourne.

Etihad has a 10 per cent stake in Virgin Australia after the two air carriers created a global alliance in 2010. The deal with Virgin is $12 million over a three-year period also.

Besides Etihad, Tourism Australia has commercial partnerships with 20 other international air carriers.

Both Qantas and Virgin are reportedly seeking new Asian partners, with Cathay Pacific the likely candidate for Virgin and China Eastern for Qantas, which has recently teamed up with Emirates for the Middle Eastern market.