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Queensland, New South Wales and Victoria battled it out for Virgin Australia's headquarters as the struggling airline went into voluntary administration

·5-min read
  • The Queensland government is fighting to ensure it keeps Virgin Australia's headquarters in the state.

  • It comes after New South Wales Treasurer Dominic Perottet said on Sky News that Virgin should put its headquarters in New South Wales.

  • The Queensland government offered to give Virgin a $200 million support package with one of the conditions that its headquarters remain in Queensland.

  • Visit Business Insider Australia’s homepage for more stories.

New South Wales, Queensland and Victoria have been battling for Virgin Australia's headquarters prior to the airline falling into administration.

Earlier this week, Virgin went into voluntary administration after it failed to secure government support. Deliotte was appointed as the voluntary administrators and it aims to refinance and restructure the business so it can get out of administration as soon as possible.

Before Virgin went into administration, Queensland and New South Wales fought over the location of its headquarters. The Queensland government said it would fight any attempts by neighbouring New South Wales to take the Virgin's headquarters from the sunshine state to Sydney.

It came after New South Wales Treasurer Dominic Perrottet told Sky News, "I've always held the view that Virgin should have their headquarters for both Virgin and Tiger in Sydney, as we are the truly global city and Australia's gateway to the world."

Queensland minister for state development Cameron Dick came for Perrottet, saying the move would impact jobs.

"At a time when their jobs hang in the balance, the 1200 Queensland families who depend on those head office jobs should not have to face the threat of being forced to move to Sydney," Dick said in a statement. "This is a time of national crisis, all governments should be working together to support jobs, not threatening them with the disruption and dislocation of an interstate move."

Dick added that moving to Sydney would "worsen the company's financial problems" because of higher leasing costs in Sydney as well as traffic congestion.

But New South Wales wasn't the only state eyeing Virgin's headquarters, Victoria also entered the foray.

According to the Sydney Morning Herald, Victorian Premier Daniel Andrews had considered offering $500 million to support the airline before it went into voluntary administration. The state government had also reportedly spoken with Australian billionaire Lindsay Fox – founder of logistics business Linfox – about moving some of Virgin's operations to Fox's Avalon Airport in Victoria.

Virgin Australian has struggled amid the coronavirus pandemic

In March, Virgin Australia was forced to cut its domestic flights by 90% following flight reductions caused by the coronavirus outbreak. It also temporarily stood down 8,000 of its 10,000-strong workforce.

Having been hit hard by the flight cuts, Virgin Australia sought a $1.4 billion loan from the federal government to stave off going into voluntary administration, according to the Australian Financial Review.

The federal government, however, refused to give Virgin Australia the bailout, as it believed it would end up owning the airline.

“We want to see two airlines in the domestic market but we’re not in the business of owning an airline,” Treasurer Josh Frydenberg said, according to the Australian Financial Review.

But earlier this month, the federal government gave Qantas and Virgin $160 million to ensure they could continue to operate domestic flights. Virgin was able to bring back 64 domestic flight routes until June 2020.

New South Wales Premier Gladys Berejiklian confirmed the state had considered a bailout for the struggling airline.

When asked about a bailout for Virgin during a press conference on Monday, Berejiklian said, "I'm happy to confirm the New South Wales government is looking at all opportunities we can have to create jobs and save jobs in New South Wales so that is definitely something that's on the agenda for us."

Queensland wants Virgin Australia to remain in the state, with help from the federal government

On Saturday, the Queensland Government offered a $200 million support package to help Virgin get back in the air. This was under conditions including it kept its headquarters in Brisbane and it received backing from the federal government. Dick called on the federal government to provide financial support.

"But we can’t do it alone, and nor should we, because all parts of Australia benefit from two national airlines," Dick said in a statement on Saturday. "We need the Australian government to lead a national effort to keep our two great airlines flying."

Dick argued that Queensland was the birthplace of both Qantas and Virgin Australia, before Qantas left the state in 1938. In Sydney at the time, a new style of service began from Australia to Britain, with the Short-S23 Empire Class flying boat which took off from Rose Bay, the ABS reported. These flying boats changed the concept of travelling long distance by air as they could take off and land on water, and were big enough to let passengers walk around during the flight.

Dick also called on the federal government not to allow a repeat of Qantas leaving to happen with Virgin.

"Now is not the time for states to be spending money to compete, it is the time to spend money to cooperate, in the national interest," he said. "Virgin is a national airline, and their survival demands a national response."

With Virgin Australia in voluntary administration, new investors have been looking to save the business, the SMH reported. And with the possibility of the airline bouncing back, the fight over the location of its headquarters could ramp up again.