The ACCC has warned Qantas it’s still considering “enforcement action” against the business if it finds evidence that its 2019 acquisition of Alliance Aviation shares broke competition rules.
On Monday morning, the organisation surprisingly released a strongly-worded update in which it said it had been “closely scrutinising” the purchase, and was focusing on the “competitive dynamics” between the two airlines.
In February 2019, the flag carrier bought a 19.9 per cent stake in Alliance, but the competition watchdog accused the flag carrier of not first approaching it for permission. The deal was potentially problematic because Alliance and Qantas are the only two operators for regular passenger flights between Brisbane and Bundaberg and Gladstone.
Qantas told Australian Aviation in response that it rejected the notion the acquisition had any impact on competition and said its shareholding was “entirely passive”.
The Australian Competition and Consumer Commission update was, it said, in response to “queries by various stakeholders” but comes 16 months after the original deal.
Upon its completion, the organisation issued a “statement of issues”, which set out its concerns at the purchase, which made Qantas the single-biggest shareholder.
Later, news emerged that the airline was considering acquiring a larger stake.
Last month, Australian Aviation reported that Alliance was set to increase profits this financial year by $7 million, despite the coronavirus pandemic. It claimed its ability to adapt planes for COVID-19 was a key factor.
The business said its “pioneering” measures, including social distancing seating plans, new cleaning regimes and passenger temperature checks, have been adopted by much of Australia’s industry.
Qantas said in a statement, “Qantas continues to fully co-operate with the ACCC’s investigation into its minority shareholding in Alliance Aviation, which has now been running for 16 months.
“The shareholding is entirely passive. Qantas has not sought board representation and has had no influence on the management of Alliance Aviation.
“Since Qantas became a shareholder, Alliance has continued to expand in competition with Qantas and others in the charter market. In announcing its record half-year results in February, Alliance said it continues to be ‘the preferred airline for the Australian mining and resources sector’.
“The shareholding has given Qantas more exposure to earnings from the resources sector, which is one of the few bright spots in the current domestic market and is primed for further growth.”
Alliance Aviation, the parent company of Alliance Airlines, describes itself as Australia’s leading air charter service operator, providing specialised services for the resources industry, as well as inbound and domestic group travel.
It currently has a fleet of 40 Fokker aircraft, employs 500 staff and provides regular and ad hoc charter services in Australia and New Zealand.