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Qantas has found an unlikely ally in its bid to buy FIFO specialist Alliance after Rex indicated it would back the deal.
However, the smaller carrier has said any purchase must come with assurances that the pair’s simulators will be available for use to rivals alongside access to parts to the E190, of which Alliance is a local supplier.
The Flying Kangaroo has already agreed a deal to purchase Alliance, but the acquisition is subject to clearance from the ACCC, which has raised concerns.
Rex’s backing significantly comes months after it agreed a separate deal to acquire rival FIFO operator Cobham, meaning it will now go head-to-head with the national carrier once again.
In a submission to the ACCC regarding the proposed takeover, Rex played down many of the worries raised by the competition watchdog.
Responding to concerns the new Qantas FIFO operation would stop ‘wet leasing’ aircraft to rivals, Rex said it would be “ludicrous” to think this would be a major problem.
“Wet leasing is simply the supply of aircraft, crew and engineering services, all of which are well within the core competencies of the major carriers,” it said.
“Furthermore, Cobham is more than able, and prepared, to gear up and take on the work if the financials are right.”
Rex added it was also “puzzling” for the ACCC to suggest any deal could raise airfares for customers.
“Rex does not believe that the Qantas takeover of Alliance will result in a significant lessening of competition as the existing market players (including VARA) have the capabilities to be able to compete vigorously for each new tender.”
The smaller airline’s backing comes only if Qantas would grant access to the new company’s E190 and Dash 8-400 simulators, as well as if Alliance provided access to spare parts for the E190 to competitors.
Qantas said in August that it believed its takeover would not hurt the “highly competitive charter segment”. It currently holds a 19.9 per cent stake in the carrier, with the new agreement seeing it acquire the airline outright.
The business’ group executive of associated airlines, John Gissing, argued, “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.”
The release of Rex’s response to the ACCC comes after the TWU said earlier this week that Qantas “cannot be trusted” to compete fairly with rivals.
Michael Kaine, the union’s national secretary said the move would allow Qantas to build a fleet of aircraft that “cannot be matched by other airlines” and increase market share at the expense of Virgin.
AgentGerko
says:I guess Rex has no option, given their purchase of Cobham, but whoa betide the poor public who will suffer huigher ares and no competition from this deal. On a lot of routes it will condemn the public to a one airline future, and watch how long it takes for them to cancel the agreementrs they have with Virgin.
Craithie
says:……and Delta.
Vannus
says:The saying ‘Greeks bearing gifts’ comes to mind.
Since March 2020 Rex’s DCEO Sharp has constantly verbally castigated QF, & its’ CEO Alan Joyce.
Why the turnabout situation now?
There must be something ‘in it’ for Rex, for this magnanimous gesture of support.
Whatever the reason(s), the ACCC should approve the purchase ASAP.
As for TWU’s Kaine, butt out, it’s none of your business what QANTAS wants to do in regards to Alliance balance of purchase.
He’s so hypocritical, didn’t bat one eyelid with Rex’s purchase of Cobham, but only reserves his hubris for QANTAS, & we all know why.