Virgin Australia has lashed out at Qantas over its claims that foreign-backed capital raising gives Virgin an unfair advantage in the aviation industry.

Last week, Virgin said it would raise up to $350 million through a share buyback.

The bulk of that capital raising is underwritten by Virgin’s major shareholders: Air New Zealand, Singapore Airlines and Etihad.

Virgin says it will strengthen the company, creating new jobs and ensuring a competitive aviation market for Australia.

But Qantas has written to the federal and state governments asking that they prevent the capital raising.

Qantas says it is subject to regulatory restrictions that do not apply to Virgin, and that creates an uneven playing field.

“The decision of these shareholders to invest in Virgin Australia’s loss-making strategy highlights that these airlines aren’t subject to the same commercial realities as Qantas,” a statement by Qantas said.

“We have asked federal and state governments to fully examine the motives behind the virtual takeover of Virgin Australia by foreign airlines, and to prevent destabilising of the domestic aviation industry, local tourism and jobs.”

ACTU urges level playing field

The Australian Council of Trade Unions (ACTU) has backed Qantas and says the Coalition should do all it can to support the airline.

“It is important that the Government not just stand on the sidelines and leave it to the market,” said ACTU secretary Dave Oliver.

“They need to be out now offering whatever support they can to ensure that the national carrier remains viable.

“The problem we have is that Qantas is competing on an unlevel playing field.

“They’re bound by the Qantas Sale Act, which requires it’s majority-owned by Australians – and that’s the right thing, and it is important that this country does have a strong, viable national carrier.

“So the Government needs to make sure that the playing field that people are competing on is even.”

Virgin says it has broken Qantas monopoly

But Virgin says it has established a competitive marketplace for travellers while adding 3,000 jobs to the local economy in the past three years.

Virgin says the Australian aviation landscape is no longer a monopoly.

“Up until recently, Australia’s corporate travel market was a monopoly for over a decade and Australian business travellers and the economy have suffered as a result of the lack of competition,” a statement said.

“Virgin Australia’s capacity increases since 2010 have been limited to routes that have been in need of further competition and frequencies, such as trans-continental routes and important regional routes throughout Australia.

“The capital raising… is designed to enhance Virgin Australia’s liquidity and gearing position to ensure we are in a stronger position moving forward, so that we can continue to bring much needed-competition to the Australian aviation market and continue to grow jobs in Australia.”