The Australian Competition and Consumer Commission (ACCC) has blocked Qantas’ bid to acquire a 100% stake in mining charter operator Alliance Airlines.
Qantas and Alliance Airlines are major air transport operators to mining and resource companies who need to transport ‘fly-in fly-out’ employees in Western Australia and Queensland.
The ACCC said that after thoroughly investigating Qantas’ proposition it had concluded that the transaction is likely to substantially lessen competition in markets for air transport services to resource industry customers in Western Australia and Queensland.
“We consider Alliance to be an important competitor to Qantas, and the removal of Alliance is likely to substantially lessen competition threatening increased prices and reduced service quality for customers,” ACCC chair Gina Cass-Gottlieb said in a statement.
“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.”
Cass-Gottlieb added: “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.”
The ACCC also said that it received feedback from customers viewing Alliance Airlines as an effective competitor.
“Alliance doesn’t sell seats on major passenger routes, so many Australians may not have heard of them, but it is one of Australia’s most significant airlines, with 70 aircraft currently and more on order.Combining such an important player with Australia’s largest airline, Qantas, would be likely to substantially lessen competition and is something we oppose,” Cass-Gottlieb said.
The ACCC also considered the level of competition provided by other airlines such as Virgin Australia, National Jet Express (recently purchased by Rex), and other smaller market participants.
The regulator found that it is unlikely that a new or existing airline could expand rapidly to a scale that would address the loss of competition resulting from the proposed acquisition.
Qantas wants more information
Meanwhile, Qantas said that it will seek more information regarding ACCC’s decision to block the AU 614 million ($412 million) proposed acquisition of Alliance Airlines.
In a statement released April 20, 2023, the Australian flag carrier said that it remains confident that the acquisition “would not substantially lessen competition in any market”.
Qantas also cited competitor Rex Airlines’ acquisition of National Jet Express, which the ACCC took 11 days to approve and clear.
The airline said that it believes that the proposed acquisition of Alliance would enable Qantas to service this important sector better, particularly through the efficiencies of a combined fleet of similar aircraft.
Qantas first proposed its long-term interest in acquiring 100% of Alliance Airlines when it bought just under 20% of the charter operator in February 2019. The ACCC investigated that minority holding for three years and made no findings that it lessened competition.
Qantas said that it requested a meeting with ACCC to “understand its decision”.
