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Competition concerns: Qantas takeover of Alliance blocked by ACCC

The Qantas takeover of Alliance Aviation is in tatters after the competition regulator said it would oppose the $610 million deal because it would lessen competition in the fly-in, fly-out mining sectors in Queensland and Western Australia.

Apr 20, 2023, updated Apr 20, 2023
The Embraer E190 bought by Alliance. Image: Alliance Airlines.

The Embraer E190 bought by Alliance. Image: Alliance Airlines.

The two airlines are key providers of FIFO services to remote mines and Alliance even provides 18 aircraft and crew to Qantas with the option to move to 30.

It has taken almost a year for the ACCC to reach its decision which it said included a thorough investigation which found that the deal would reduce competition.

“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 has rejected that finding and said it wanted more information and a meeting with the ACCC to get a better understanding of the decision.

The airline said the decision was “at odds with the increasingly competitive nature of the segment”.

“Australia has one of the most competitive aviation industries in the world. That competitive dynamic is intensifying with new entrants and expansion of existing carriers and significant growth in the resources sector,” Qantas said.

However, the ACCC said the feedback from the mining industry was that Alliance was strongly valued as a vigorous and effective competitor.

Cass-Gottlieb said the ACCC investigation did consider the level of competition from other carriers and found that it was unlikely that a new or existing airline could expand quickly enough to fill the gap left by Alliance if the takeover went ahead.

Alliance managing director Scott McMillan said the company was disappointed with the decision by the ACCC.

“While we respect the ACCC and the process, we remain of the view that there is a strong industrial logic for Alliance to be a part of the Qantas Group and that the proposal does not substantially reduce competition,” he said.

“We think there is a compelling case that the proposed transaction will lead to superior outcomes both for Alliance shareholders and for our customers.”

The collapse of the deal means Qantas is left holding a 19.9 per cent stake in the company, which it has held since 2019.

 

 

 

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