Qantas today reaffirmed its view that its acquisition of Alliance Aviation Services Ltd (Alliance) would not lessen competition in Australia’s highly competitive charter segment.
Qantas currently owns just under 20 per cent of Alliance and is its biggest customer, wet leasing up to 18 Embraer aircraft that Alliance operates on the national carrier’s behalf on a number of routes.
In May, Qantas announced it had reached an agreement to fully acquire Alliance, enabling it to better serve the growing resources sector with a combined fleet. That agreement includes a condition for competition clearance.
Alliance represents around two per cent of the total Australian aviation industry and supplies about 30 per cent of the charter services, with the remainder split between Qantas (around 23 per cent), Virgin Australia (around 22 per cent) and a number of other operators.
Qantas has met with the Australian Competition and Consumer Commission (ACCC) and provided a detailed submission on the competitive nature of the charter services.
Since Qantas announced its planned acquisition of Alliance, Rex announced its acquisition of charter operator National Jet Express from Cobham Aviation, receiving ACCC clearance 11 days later, and Virgin Australia has been clear about its acquisition of new aircraft to expand its own resources flying. Several other airlines and aviation businesses also service the charter sector.
When Qantas bought just under 20 per cent of Alliance in February 2019, it flagged its long-term interest in ultimately acquiring 100 per cent of the charter airline. The ACCC investigated that minority holding for three years and made no findings that it lessened competition.
In addition to its fleet of newer Embraer aircraft, Alliance has approximately 70 older Fokker jet aircraft that are well suited to providing charter services. Full acquisition would enable Qantas and Alliance to combine their Fokker fleets, extending their economic life by an additional five years.
Qantas Executive commentary
Qantas Group Executive of Associated Airlines and Services John Gissing said the airline would continue to work with the ACCC to ensure any competition concerns were addressed.
“Australia has one of the most pro-competitive aviation industries in the world, as shown by the post-COVID expansion of carriers domestically and growth in the resources sector itself.
“There are a significant number of charter operators of different sizes and that makes it an extremely competitive segment. 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.
“As the ACCC has previously acknowledged, customers in the resources flying segment are sophisticated and well-resourced companies with procurement expertise who have strong bargaining power in their negotiations with airlines and other operators.
“The resources sector continues to grow and any new tender for airline services will be very competitive. It makes a lot of sense for us to combine with Alliance to improve the services we can offer, which is a positive for both airlines as well as the travelling public.”
