QANTAS Airways has said it will seek more information on the Australian Competition & Consumer Commission’s (ACCC) decision this morning to oppose the planned acquisition of Alliance Aviation Services.
After a thorough investigation, the ACCC said it has concluded the transaction is likely to “substantially lessen competition in markets for the supply of air transport services to resource industry customers” in Western Australia and Queensland.
However Qantas said it remains confident the acquisition would not substantially lessen competition in any market, and requested a meeting with the ACCC to understand its decision.
Qantas said the decision is at odds with the increasingly competitive nature of the segment, and noted one of its competitors believes the acquisition would not lessen competition.
The ACCC said it carefully considered the level of competition provided by other airlines such as Virgin Australia and National Jet Express (which was recently purchased by Rex), and other smaller market participants.
It found it to be unlikely a new or existing airline could expand quickly to a scale that would address the loss of competition resulting from the proposed acquisition.
“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 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 also received considerable feedback Alliance is strongly valued by customers as a particularly vigorous and effective competitor.
“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 flexibility and willingness to meet customer needs,” Cass-Gottlieb said.
“Combining such an important player with Australia’s largest airline, Qantas, would be likely to substantially lessen competition and is something we oppose.”
“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.”