Australian Regulator Solicitous about Qantas Acquisition
- by Ian MacDonald
- October 30, 2022
- 2 minutes read
DALLAS – The Australian Competition and Consumer Commission (ACCC) has expressed competition concerns over Qantas Airways’ (QF) proposed takeover of Alliance Airlines (QQ).
Gina Cass-Gottlolieb, the Chair of the ACCC, said, “We are concerned that this proposed acquisition is likely to substantially lessen competition for air transport services to and from regional and remote areas in Queensland and Western Australia for corporate customers.”
She 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.”
Founded in 2002 with just three aircraft, QQ 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 owns and operates a fleet of Fokker and Embraer aircraft, including Fokker 70, Fokker 100, and Embraer 190 jet aircraft.
With bases in Brisbane (BNE), Adelaide (ADL), Melbourne (MEB), Perth (PER), and Townsville (TSU), and an all-jet fleet of 64 aircraft, QQ has branched out to provide not only FIFO services but also private corporate charter, regional passenger services, and aircraft leasing. In fact, QQ is a major supplier of wet-leased aircraft, which is of particular concern to the ACCC.
According to Ms. Cass-Gottlieb, “Our preliminary view is that there are already significant barriers for airlines who want to enter or expand their operations in regional and remote areas, including access to pilots, airport facilities and infrastructure, and associated regulatory approvals. The removal of Alliance as a supplier of wet-leases or the increase in the price of wet-leases for Qantas’ competitors is likely to significantly increase these barriers.”
Comments from Qantas
In a press release, QF expressed its disappointment with the ACCC decision and expressed frustration with the delay. The airline claims to have always been open about its dealings with QQ.
In 2019, QF acquired just fewer than 20% of QQ and stated publicly that it would ultimately seek ACCC approval to take a majority position in the FIFO service provider.
In May 2022, QF announced that it had reached an agreement to fully acquire QQ and expected quick approval of the deal as the ACCC had investigated the minority holding in 2019 and made no finding that it lessened competition.
The ACCC will release its final decision on the matter on November 17, 2022.
Qantas claims the delay caused by the ACCC will push back its full acquisition of QQ to March 20, 2023, nearly 10 months after the two airlines filed their application for the merger.
This is a developing story.
Featured image: Alliance Airlines VH-FKO Fokker 50. Photo: Noah Pitkin/Airways