Watchdog Opposes Qantas’s Mining Charter Acquisition

DALLAS — Australia's competition regulator blocked Qantas Airways' (QF) US$409m acquisition of Australian charter carrier Alliance Aviation.

The Australian Competition and Consumer Commission (ACCC), the chief competition regulator of the Government of Australia located within the Department of the Treasury, stated that a deal between Alliance and QF would increase prices for flights to Queensland and Western Australia states while decreasing service quality.

Both airlines are major players in flying mining companies who need to transport "fly-in fly-out" employees in Queensland and Western Australia.

Founded in 2002 with just three aircraft, Alliance Airlines created a niche for itself by providing air services primarily to resource companies with sites in remote areas of Australia. Often, these companies require their workers to be flown in and out (FIFO) of these remote work sites. Alliance Airlines (QQ) owns and operates a fleet of Fokker and Embraer aircraft, including Fokker 70, Fokker 100, and Embraer 190 jet aircraft.

As reported by FlightGlobal, this is the first deal not to receive approval by new ACCC chair Gina Cass-Gottlieb. In a statement, Cass-Gottleib commented, "The removal of Alliance is likely to substantially lessen competition threatening increased prices and reduced service quality for customers. Qantas and Alliance currently strongly compete with each other in markets where there are few effective alternatives."

Today, the ACCC released its decision on QF's proposed takeover of Alliance Airlines (QQ) after almost a year of deliberations. The decision comes after QF, Australia's largest airline, announced in May 2022 that it planned to purchase QQ in an all-stock deal.

Not an Unexpected Outcome

Last October, the Chair of the ACCC expressed concerns that the proposed acquisition was "likely to substantially lessen competition for air transport services to and from regional and remote areas in Queensland and Western Australia for corporate customers.”

Cass-Gottlieb also noted that other industry participants had “expressed strong concerns about the impact of this proposed acquisition on air transport services, particularly to regional and remote areas.”

Qantas already owned 20% of QQ and is its biggest customer. QQ is one of the largest charter airlines in Australia and currently leases 19 Embraer E190 jets to Qantas.

Although a Qantas-Alliance acquisition would make it the charter and fly-in fly-out market leader, Virgin Australia (VA), and National Jet Express (NC) each also have a large presence in the market. NC recently acquired domestic carrier Rex Airlines (ZL).

Featured image: Qantas VH-QPB Airbus A330-300. Photo: Malcolm Nason/Airways

https://airwaysmag.com/australian-reg-qantas-acquisition/