The Australian Competition and Consumer Commission (ACCC) has opposed Qantas $614 million proposed acquisition of Alliance Aviation Services after a thorough investigation. ACCC cited the reason as the planned buyout would lessen competition in the supply of air transport services to resource industry customers in Western Australia and Queensland.
Qantas and Alliance are key suppliers of air transport services to mining and resource companies that require fly-in fly-out (FIFO) workers 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. “Qantas and Alliance currently strongly compete with each other in markets where there are few effective alternatives.”
Cass-Gottlieb expressed that the proposed acquisition would combine two of the largest suppliers of charter services in Western Australia and Queensland.
The ACCC highlighted the importance of protecting such a market given the importance of FIFO workers to the economy.
The authority also noted the feedback received indicated Alliance was strongly valued by customers as a “vigorous and effective” competitor to Qantas.
“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,” Cass-Gottlieb said.
“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.
After the ACCC announcement, Qantas released a statement seeking greater clarity over its decision. Qantas reaffirmed its position that the acquisition would not substantially lessen competition in any market and would aloe it to better service the resources sector.
Qantas has also requested a meeting with ACCC to go over the decision.
Scott McMillan, Alliance managing director has also expressed disappointment with ACCC’s decision. “The airline would closely consider the watchdog’s decision and its options before deciding on next steps,” McMillan said.
Qantas is also Alliance’s biggest customer, wet leasing 18 Embraer aircraft that are operated on the national carrier’s behalf on a number of routes. In February, Qantas announced options for up to 12 additional E190 aircraft to be wet leased from Alliance to provide increased capacity and network connectivity in the domestic market.
Qantas expressed that since its announcement to fully acquire Alliance in May 2022, fellow competitor Rex acquired charter operator National Jet Express from Cobham Aviation, and Virgin Australia was cleared in its plans to expand its own resources flying.
In 2019 Qantas acquired 19.9% of Alliance, which was ultimately waved through by the ACCC, and followed that in May 2022 with a bid to buy the remaining Alliance shares, with Alliance agreeing to the takeover.