Australia’s competition watchdog has expressed preliminary concerns about Qantas’ proposed acquisition of Alliance Aviation Services, arguing that the takeover is likely to significantly reduce competition for air transport services in remote and regional areas.
In a statement of issues issued Thursday, Australia’s Competition and Consumer Commission responded to Qantas’ $614 million proposal to acquire the ASX-listed fly-in fly-out airline ahead of a final decision in November.
Representing approximately 2 percent of the total aviation industry, Alliance Aviation Services is used primarily by mining and resource companies that need to transport workers in Queensland and Western Australia. It provides 30 per cent of charter services, with the remainder split between Qantas (which owns about 23 per cent), Virgin (which owns 22 per cent) and a number of smaller operators.
Qantas acquired a 19.9 percent stake in Alliance Aviation Services in 2019. In May, Qantas announced that it had reached an agreement with Alliance to acquire the remaining 80 percent stake and filed an application with the ACCC. Under the proposal, Alliance shareholders would receive $4.75 worth of Qantas shares for every Alliance share, which is currently worth $3.34.
If successful, the merger will bring together two of the three largest air transport operators in Queensland and Western Australia. It would also eliminate Alliance as Qantas’ sole competitor on the Brisbane-Moranbah regional passenger route.
“We are concerned that this proposed acquisition is likely to significantly reduce competition for air services to and from regional and remote areas in Queensland and Western Australia for corporate customers,” Gina Cass-Gottlieb, chair of ACCC, said on Thursday.
Qantas isn’t the only airline looking to expand its charter offering. In July, Rex acquired charter operator National Jet Express from Cobham Aviation and received ACCC approval 11 days later. Virgin Australia has also expressed a desire to acquire new aircraft to expand its own flight capabilities.
The ACCC said they are considering Virgin’s level of competition, as well as Cobham’s recent acquisition of Rex and how the termination of Alliance’s aircraft leasing services would affect the ability of existing and new airlines to compete against Qantas on regional routes
https://www.smh.com.au/business/companies/accc-flags-concerns-with-qantas-s-proposed-takeover-of-alliance-australia-20220818-p5bas9.html?ref=rss&utm_medium=rss&utm_source=rss_business Acquisition of Qantas (QAN) Alliance Australia raises concerns at ACCC