Source: Reuters
The Market Online - At The Bell

Join our daily newsletter At The Bell to receive exclusive market insights

  • The Australian Competition and Consumer Commission (ACCC) flags concerns on Qantas’ (QAN) proposed acquisition of Alliance Aviation Services (AQZ)
  • The competition watchdog says the proposed acquisition will heighten the barriers to enter the regional and remote transport services in Queensland and Western Australia
  • Currently, the ACCC is taking two factors into consideration – the level of competition provided by other airlines and how the removal of Alliance’s aircraft services will impact other competitors’ ability to compete against Qantas on regional routes
  • The national aircraft carrier holds 20 per cent interest in Alliance
  • Alliance shares are down 3.10 per cent, trading at $3.44 per share and Qantas shares drop 1.04 per cent, trading at $4.77 each on market close

The Australian Competition and Consumer Commission (ACCC) has flagged concerns on Qantas’ (QAN) proposed acquisition of Alliance Aviation Services (AQZ).

The ACCC said in a statement that the proposed acquisition will substantially lessen competition for air transport services to and from regional and remote areas in Queensland and Western Australia for corporate customers.

The proposed acquisition would remove Alliance as the only competitor to Qantas on the
Brisbane-Moranbah regional passenger transport route.

“This merger would combine two of the top three operators of air transport services in
Queensland and Western Australia” said ACCC Chair Gina Cass-Gottlieb.

“Industry participants have expressed strong concerns about the impact of this proposed
acquisition on air transport services, particularly to regional and remote areas.”

Ms Cass-Gottlieb pointed to the presence of “significant” barriers for airlines wanted to expand their operations into regional and remote areas, which will increase the barrier if the acquisition removed Alliance as a supplier of wet-leases or the increase in price of wet-leases for Qantas’ competitors.

“A competitive and well-functioning aviation sector is fundamental to the Australian economy. We will closely scrutinise all mergers that may reduce competition in this sector.”

Currently, the ACCC is taking two factors into consideration – the level of competition provided by airlines like Virgin and Rex and how the removal of Alliance’s aircraft leading services will impact the ability of current and new entrants to compete against Qantas on regional routes.

Qantas had planned to acquire the remaining 80 per cent of Alliance where each shareholder in the company will receive $4.75 in QAN shares for each Alliance share they hold.

The national aircraft carrier holds 20 per cent interest in Alliance.

Alliance shares were down 3.10 per cent, trading at $3.44 per share and Qantas shares were down 1.04 per cent, trading at $4.77 each on market close

AQZ by the numbers
More From The Market Online

South32 to sell Illawarra Metallurgical Coal in $2.5b deal

South32 (ASX:S32) has entered an agreement to sell Illawarra Metallurgical Coal to an entity owned by…

Brambles’ strong 1H FY24 result proof of a recovering global supply chain

Logistics giant Brambles (ASX:BXB) – an A$21 billion logistics company that is well known for being…

Renesas set to acquire ASX-listed Altium for $9.1b

Renesas Electronics Corporation has reached an agreement to acquire all outstanding shares of Altium (ASX:ALU) through…