Qantas’ plans to purchase charter and FIFO specialist Alliance are now in doubt after the ACCC raised concerns in its preliminary report into the takeover.
It said the move could “substantially lessen competition” in regional Queensland and WA, and also queried how it would affect Alliance’ s wet lease agreements with other airlines.
Qantas has doubled down and said today’s news has only “reaffirmed its view” that the takeover would not hurt the “highly competitive charter segment”.
Australian Aviation reported in May how the Flying Kangaroo would purchase all of Alliance Aviation three years after acquiring a 19.9 per cent stake in the carrier.
It was shortly followed by rival Rex purchasing FIFO operator Cobham, as major airlines looked to invest in reliable FIFO (fly in, fly out) services during the difficult post-COVID-19 recovery.
However, on Thursday, the ACCC’s new chair, Gina Cass-Gottlieb, raised concerns in the organisation’s preliminary report.
“This merger would combine two of the top three operators of air transport services in Queensland and Western Australia,” said Ms Cass-Gottlieb.
“Industry participants have expressed strong concerns about the impact of this proposed acquisition on air transport services, particularly to regional and remote areas.
“Our preliminary view is that there are already significant barriers for airlines who want to enter or expand their operations in regional and remote areas, including access to pilots, airport facilities and infrastructure, and associated regulatory approvals.
“A competitive and well-functioning aviation sector is fundamental to the Australian economy. We will closely scrutinise all mergers that may reduce competition in this sector.”
Alliance is an aviation services company based in Brisbane, Townsville, Cairns and Perth. It specialises in private charter flight services to corporate customers (such as flights for workers to mines in remote areas) as well as some regional services available to the public.
Significantly, Alliance holds a wet lease agreement with Virgin to use its smaller aircraft fleet for charter and FIFO operations.
The ACCC has raised concerns, therefore that Qantas could either stop that deal, or increase the price, hurting competition. This could potentially affect the routes of Brisbane-Emerald, Brisbane-Mt Isa, Brisbane-Alice Springs, Brisbane-Rockhampton, Brisbane-Newcastle and Brisbane-Gladstone.
The ACCC is now inviting submissions from other interested parties, with a final decision due on 17 November.
Qantas’ John Gissing said the airline would continue to work with the ACCC to ensure any competition concerns were addressed.
“Australia has one of the most pro-competitive aviation industries in the world, as shown by the post-COVID-19 expansion of carriers domestically and growth in the resources sector itself.
“There are a significant number of charter operators of different sizes and that makes it an extremely competitive segment. We’re confident our acquisition of Alliance does not substantially lessen that competition and we’ll work through the ACCC’s process to support that position and address their initial concerns.
“As the ACCC has previously acknowledged, customers in the resources flying segment are sophisticated and well-resourced companies with procurement expertise who have strong bargaining power in their negotiations with airlines and other operators.
“The resources sector continues to grow and any new tender for airline services will be very competitive. It makes a lot of sense for us to combine with Alliance to improve the services we can offer, which is a positive for both airlines as well as the travelling public.”