Image Credit: Qantas
Qantas will seek more information from the Australian Competition and Consumer Commission (ACCC) about its decision to oppose the planned acquisition of Alliance Aviation Services Ltd (ASX: AQX) (Alliance). Qantas remains confident the acquisition would not substantially lessen competition in any market.
As well as reviewing the announcement released today, the airline has requested a meeting with the ACCC to understand its decision, which is at odds with the increasingly competitive nature of the segment and views expressed by a competitor[1] that the acquisition would not lessen competition.
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.
Since Qantas announced it had reached an agreement to fully acquire Alliance in May 2022, competitor Rex has acquired charter operator National Jet Express from Cobham Aviation, a transaction that received ACCC clearance within 11 days, and Virgin Australia has been clear about its plans to expand its own resources flying[2]. Several other airlines and aviation businesses also offer charter services.
As the ACCC has previously acknowledged[3], customers in the resources segment are sophisticated and well-resourced with procurement expertise and strong bargaining power in their negotiations with airlines and other operators.
The proposed acquisition of Alliance would enable Qantas to service this important sector better, particularly through the efficiencies unlocked through a combined fleet of similar aircraft.
Qantas first flagged its long-term interest in ultimately acquiring 100 per cent of Alliance when it bought just under 20 per cent of the charter operator in February 2019. The ACCC investigated that minority holding for three years and made no findings that it lessened competition.
Qantas is also Alliance’s biggest customer, wet leasing 18 Embraer aircraft that are operated on the national carrier’s behalf on a number of routes. Qantas in February announced options for up to 12 additional E190 aircraft to be wet leased from Alliance to provide increased capacity and network connectivity in the domestic market.
