ACCC opposes sale of Alliance to Qantas in $614m deal
By ROBYN IRONSIDE
AVIATION WRITER
Qantas is seeking an urgent meeting with the competition watchdog which has announced it will oppose the $614m sale of Alliance Aviation to the larger airline. The Australian Competition and Consumer Commission’s decision was delivered on Thursday after five postponements over almost a year.
ACCC chair Gina Cass-Gottlieb said the commission had concluded the transaction was likely to substantially lessen competition in the fly-in, fly-out markets of Queensland and Western Australia.
“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,” said Ms Cass-Gottlieb.
“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.”
The ACCC had received considerable feedback that Alliance was strongly valued by resource industry customers as a vigorous and effective competitor.
“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,” Ms Cass-Gottlieb said.
“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 f lexibility and willingness to meet customer needs.”
She said many Australians may not have heard of the Brisbane-based Alliance, but it was “one of the country’s most significant airlines, with 70 aircraft and more on order”.
“Combining such an important player with Australia’s largest airline, Qantas, would be likely to substantially lessen competition and that is something we oppose,” Ms Cass-Gottlieb said.
“Qantas will face limited competition if allowed to acquire Alliance because most other airlines lack the right aircraft, fleet size, or capabilities needed to compete effectively.”
A Qantas spokeswoman said the airline was seeking an urgent meeting with the ACCC chair, to try to better understand the decision. A statement issued by the airline said the proposed acquisition of Alliance would enable Qantas to service the important resources sector better, particularly through the efficiencies unlocked through a combined fleet of similar aircraft.
“Qantas first flagged its long-term interest in ultimately acquiring 100 per cent of Alliance when it bought just under 20 per cent of the charter operator in February 2019,” said the statement.
“The ACCC investigated that minority holding for three years and made no findings that it lessened competition.” Qantas also made the point it was Alliance’s biggest customer, wet leasing 18 Embraer aircraft that were operated on the national carrier’s behalf on a number of routes.
Under the deal proposed by Qantas and backed by the Alliance board, shareholders in Alliance would receive Qantas shares to the value of $4.75 for each Alliance share.
On Thursday, Qantas shares were set to open at $6.55 and Alliance at $3.51.
https://www.theaustralian.com.au/bus...al/news-story/