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ACCC clears Qantas’ stake in Alliance after 3-year wait

written by Adam Thorn | April 6, 2022

Mock-up of an Embraer E190 in QantasLink livery by Lila Design.

The ACCC has finally confirmed it will not take any action against Qantas for buying a 19.9 per cent stake in Alliance in February 2019.

The Flying Kangaroo paid $60 million but its stock is now worth more than $90 million after the smaller airline became one of the industry’s pandemic success stories.

Alliance managing director Scott McMillan revealed the competition watchdog confirmed the decision in a letter that stated action will not be taken “at this point in time”.

QantasLink is currently wet-leasing 11 of Alliance’s Embraers, with the possibility that seven more could be put into service in the next two years.

The announcement marks a significant change in tone from the ACCC after it initially said it was concerned the shareholding could “have the effect of substantially lessening competition in markets for the supply of fly-in fly-out (FIFO) charter airline services, and regular passenger transport (RPT) services on routes serviced by Alliance Airlines aircraft”.

“Alliance Airlines is often Qantas’ only or closest competitor (or an integral input to Virgin where Virgin is Qantas’ only or closest competitor) for these services,” it previously argued.

However, last year, Alliance itself signed a separate deal with rival Virgin to collaborate on 41 regional routes until 31 March 2023. The ACCC cleared that agreement, too, despite fierce opposition from Rex.

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Alliance has been one of the few success stories of the last two years, capitalising on the reduced schedule of larger carriers and the need for COVID-adapted planes.

In May 2020, it announced it had increased profits that financial year by $7 million, and subsequently increased that again to $34 million after-tax for the 2020-21 financial year.

The good results allowed it to sign a deal for 14 new E190 jet aircraft in June 2020 and then a further 16 in December 2020.  By the end of 2022, Alliance hopes to have 76 aircraft in its fleet.

In addition to wet-leasing, Alliance has been able to cash in on an unprecedented drop in domestic commercial airline flights, which McMillan said resulted in a new surge of demand for FIFO services.

Comment (1)

  • Vannus

    says:

    If QANTAS had done anything wrong, the ACCC would’ve come down on them like a ton of bricks, within five minutes’.

    So it takes them three YEARS’ to say ‘ok’.

    Totally unbelievable.

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