The ACCC is officially opposing Qantas’ proposed takeover of FIFO operator Alliance Aviation Services after a lengthy review process.
The competition watchdog today said that allowing the merger to go ahead would likely substantially lessen competition, thus threatening “increased prices and reduced service quality” for resource industry customers in WA and Queensland.
“Qantas and Alliance currently strongly compete with each other in markets where there are few effective alternatives. The proposed acquisition would combine two of the largest suppliers of charter services in Western Australia and Queensland,” said ACCC Chair Gina Cass-Gottlieb.
“Flying workers in the resource industry to and from their worksites is an essential service for this important part of the Australian economy, so it is critical that competition in this market is protected.”
Ms Cass-Gottlieb said that, though it does not sell seats on major passenger routes, Alliance – which operates 70 aircraft with more on order – is still “one of Australia’s most significant airlines”, and said it is unlikely that a new or existing airline could expand quickly enough to address the loss of competition from the deal.
“For many customers, Alliance is the preferred supplier due to its large fleet capacity, customer-centric approach and high-quality service offerings, including having the highest on-time-performance in the industry and demonstrated flexibility and willingness to meet customer needs,” she said.
“Combining such an important player with Australia’s largest airline, Qantas, would be likely to substantially lessen competition and is something we oppose.”
In a statement, Qantas said it is confident the merger would not substantially lessen competition in any market, and pointed out that one of its major competitors, Rex, had offered its own backing for the deal.
“Australia has one of the most competitive aviation industries in the world. That competitive dynamic is intensifying with new entrants and expansion of existing carriers and significant growth in the resources sector,” the Flying Kangaroo said, adding that it is seeking a meeting with the ACCC to understand the decision.
“Since Qantas announced it had reached an agreement to fully acquire Alliance in May 2022, competitor Rex has acquired charter operator National Jet Express from Cobham Aviation, a transaction that received ACCC clearance within 11 days, and Virgin Australia has been clear about its plans to expand its own resources flying. Several other airlines and aviation businesses also offer charter services.”
The announcement comes after four delays on the part of the ACCC, the most recent in March resulting from Qantas’ decision to expand its wet lease agreement with Alliance and news that Alliance would purchase an extra 30 Embraer E190 aircraft.