It is more than three years since Australia’s flag carrier Qantas first bought a 19% stake in Alliance Airlines. That purchase prompted the regulator, the Australian Competition and Consumer Commission (ACCC), to express concerns about competition being lessened by the acquisition.
Why is this taking so long?
Photo: Alliance Airlines
After an exhaustive investigation, the ACCC cleared the Qantas minority holding of any issues. However, the issue bubbled right to the surface again in May this year when Qantas made an AU$164 million ($397 million) takeover offer for 100% of Alliance.
That prompted the ACCC to open another investigation, issuing a Statement of Issues outlining its concerns and inviting comments from interested parties. Based on the ACCC timeline, findings were due on August 4th, although that was later moved to November 17th and again to December 1st. Today the ACCC adjusted the timeline “to allow the parties more time to provide information,” kicking the can down the road until March 20th, 2023, to make its decision. The new timeline does say that this is the provisional date for the announcement of ACCC’s decision, so nothing is set in concrete.
Unsurprisingly, Qantas is not at all happy with the delays, prompting it to issue its own statement earlier today. It opened by expressing its disappointment in the ACCC for again delaying a decision, saying it has been clear about its intention to fully acquire Alliance since it took the stake in 2019. It also further criticizes the ACCC for delaying the decision until March next year, pointing out that it will be around ten months since Qantas and Alliance filed their application for informal merger clearance. The statement reads:
“This would make it one of the longest processes for informal clearance in recent times. This compares with the 11 days it took the ACCC to decide it didn’t need to conduct a public review of Rex’s acquisition of National jet Express from Cobham in July.”
The FIFO market is the main prize
Photo: Cobham Aviation Services
That last sting in the tail sounds very much like comments coming from CEO Alan Joyce whenever he sees a competitor getting in the way of Qantas. Rex bought National Jet Express in August as a means to enter Australia’s lucrative fly-in fly-out (FIFO) market, which transports workers to remote resource projects around the country. Alliance is the major player in that field, and if the ACCC gives Qantas the green light to take over Alliance, it will control around 70% of the market.
Currently, Alliance has an agreement with Virgin Australia and Virgin Australia Regional Airlines (VARA) that allows them to coordinate schedules on FIFO services. The ACCC first authorized the deal in 2017, and it’s due for renewal, which is also under ACCC review. The ACCC says it wants to ensure that the public benefits outweigh the anti-competitive elements of the Alliance-Virgin agreement. Submissions to that inquiry close on November 4th, but no date is set for a final determination.
The last word goes to Qantas, which says it’s a,
“firm believer in regulation and due process and has cooperated fully with information requests from the ACCC, but also believes such regulation needs to be timely and efficient to maintain confidence in the process.”
The board of Alliance Airlines has endorsed the Qantas takeover, and it seems absurd that the ACCC decision is taking so long. Australia has a relatively straightforward aviation market which the ACCC has overseen for years, so in this case, the airline is right to be critical of the regulator.
Are there any FIFO workers who have flown with Alliance or National Jet Express who can tell us about the experience?
- IATA/ICAO Code:
- Airline Type:
- Full Service Carrier
- Brisbane Airport, Melbourne Airport, Sydney Kingsford Smith Airport
- Year Founded:
- Alan Joyce