ACCC raises concerns on Qantas takeover of Alliance Airlines

| August 18, 2022

Sydney

Qantas’ $614 million takeover of resources sector charter flights provider Alliance Airlines could be heading into turbulence.

The competition regulator has raised concerns about the national carrier’s plan to acquire the 80 per cent of Alliance it does not already own.

The Australian Competition and Consumer Commission said the merger could “substantially” lessen competition for air services to and from regional and remote areas in Queensland and Western Australia.

Alliance is a major provider of air transport for fly-in fly-out workers in both states. Qantas also operates in this space under its QantasLink brand.

The ACCC said the transaction would mean two of the top three operators of air services in Queensland and Western Australia would be combined into one.

“Industry participants have expressed strong concerns about the impact of this proposed acquisition on air transport services, particularly to regional and remote areas,” ACCC Chairwoman Gina Cass-Gottlieb said on Thursday.

In May, when the acquisition was announced, Qantas CEO Alan Joyce said tenders for airline services in the resources sector, including the fly-in fly-out market, were 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,” he said.

Ms Cass-Gottlieb said the regulator’s preliminary view was that there are already significant barriers for airlines wanting to expand in regional and remote areas.

She also noted the potential withdrawal of Alliance as a supplier of so-called wet leases, where an airline leases a plane and crew from another, or a rise in the price of wet leases under a new owner, which also had competition impacts.

“A competitive and well-functioning aviation sector is fundamental to the Australian economy,” she said.

“We will closely scrutinise all mergers that may reduce competition in this sector.”

The regulator is seeking submissions on the planned deal by September 1.

Qantas bought 20 per cent of Alliance Aviation Services in 2019.

Under its plan, Alliance shareholders would receive two Qantas shares worth $4.75 for every share held and Qantas would issue new shares valued at around $614 million to support the transaction.

Alliance, which has been operating for more than 20 years, has a full-time workforce of 850 and has bases in Brisbane, Townsville, Cairns, Melbourne, Adelaide, Perth, Darwin and Rockhampton.

AAP