Qantas barred from advertising in the Financial Review, after Virgin named ‘preferred airline’

Qantas has been told by Fairfax that its advertising dollars will not be welcome at the Australian Financial Review after the publisher struck an agreement for Virgin Australia to become its “preferred airline”.

The airline has been frozen out from advertising with the AFR for six months, following the Virgin deal in an unusual agreement that will further sour already strained relations between Qantas and Fairfax.

While the ad ban is not thought to have extended to the Sydney Morning Herald or The Age, Qantas has not directed ad money to either publication for some time amid clashes over what the airline has considered to be overly negative reporting.

Qantas is understood to have no particular grievance with the AFR and has, from time to time, continued to place ads in the business tabloid. A restaurant awards program launched by the AFR last month continues to be supported by Qantas and Vittoria Coffee.

Fairfax and Qantas declined to comment on the advertising block, with both citing a reluctance to discuss commercial arrangements.

The stand-off should further benefit News Corp which has seen an increasing proportion of Qantas’s ad spend in recent times.

The naming of a preferred airline for staff business travel is not unusual as companies are regularly courted by carriers bidding for lucrative corporate accounts.

Virgin has been particularly aggressive in trying to prise accounts from Qantas since ditching its low cost image in 2011 and rebranding from Virgin Blue to full service airline Virgin Australia.

Fairfax sent a note to its “jetsetters” outlining the “exciting new partnership” with Virgin Australia and urging staff to use the airline wherever possible.

“Providing Virgin with a higher proportion of our travel spend reflects the airline’s relative advertising spend with us,” it said. “Our great deal also extends to international travel with Virgin Australia’s airline partners including Singapore Airlines, Etihad Airways, Delta Airlines and Air New Zealand.”

The note to staff also outlined that Virgin will match the Qantas Frequent Flyer status of employees.

Virgin Australia declined to comment on “confidential commercial agreements” but confirmed one of its key strategies was bolstering its number of corporate accounts. The deal between Virgin and Fairfax and also the bar on Qantas, was first revealed by the AFR’s Rear Window columnist Joe Aston yesterday. 

Asked if blocking ads from Qantas and working only with Virgin could raise competition issues, the Australian Competition and Consumer Commission (ACCC) said it would need to assess any conduct to determine if it warranted further investigation.

“Businesses can seek authorisation to engage in arrangements or conduct that may breach the competition provisions in the Act, including exclusive dealing,” the ACCC said.

“The ACCC can ‘authorise’ businesses to engage in certain anti-competitive arrangements or conduct when it is satisfied that the public benefit outweighs the public detriment, including from any lessening of competition.

“Exclusive agreements can exist in a wide range of commercial arrangements, these agreements do not necessarily contravene the Competition and Consumer Act.

“The ACCC would need to assess the conduct in further detail to determine whether the conduct substantially lessens competition and is anti-competitive within the meaning of the Competition and Consumer Act.

“If the conduct is anti-competitive, a business can receive immunity from prosecution through the notification process or apply for authorisation.”

Steve Jones