Qantas purchase strikes turbulence

The proposed acquisition of Alliance Airlines by Qantas has struck some headwinds this week, with the the Australian Competition and Consumer Commission (ACCC) suggesting the deal raises “preliminary competition concerns”.

AFTER hearing the objections from key stakeholders over the last couple of months, the competition watchdog said the move by Qantas to purchase the remaining 80% stake in the private charter airline would likely substantially lessen competition for air transport services to and from regional and remote areas in Queensland and Western Australia.

“Industry participants have expressed strong concerns about the impact of this proposed acquisition on air transport services, particularly to regional and remote areas,” ACCC Chair Gina Cass-Gottlieb said.

Alliance is considered a key supplier of wet-lease agreements for medium-sized aircraft to other airlines, which are often used by airlines to expand into new routes or provide temporary capacity increases.

With this avenue closed off, the ACCC said it was concerned there would not be enough support structure in place for competitors or new entrants to the market to gain a foothold and compete with the likes of Qantas.

“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,” Cass-Gottlieb said.

“The removal of Alliance as a supplier of wet-leases, or the increase in price of wet-leases for Qantas’ competitors, is likely to significantly increase these barriers,” she added.

In response, Qantas maintained it was still “confident” the purchase of the remaining 80% of Alliance would get the tick of approval from the ACCC, highlighting that Alliance only represents 2% of the total Australian aviation industry, and supplies about 30% of charter services.

“There are a significant number of charter operators of different sizes and that makes it an extremely competitive segment,” Qantas Group Executive of Associated Airlines and Services John Gissing said.

“We’re confident our acquisition of Alliance does not substantially lessen that competition and we’ll work through the ACCC’s process to support that position and address their initial concerns.”


IMAGE SOURCE: Alliance Airlines

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