Watchdog warning to Qantas on Alliance deal

THE competition watchdog has thrown cold water on moves by Qantas to buy a majority stake in Alliance Airlines amid concerns the flag carrier will be too powerful following the collapse of Virgin.

The national flag carrier purchased a 19.9 per cent stake in Brisbane-based Alliance last year and announced plans to become its majority owner.

But the Australian Competition and Consumer Commission said that with the aviation sector in a state of upheaval it was concerned that competition by smaller airlines not be hindered.

ACCC chairman Rod Sims said the watchdog's current view was that any further increase in Qantas's stake in Alliance was very likely to raise significant competition concerns.

Alliance Airlines, founded in 2002 by aviation veterans Steve Padgett and Scott McMillan, has succeeded by focusing on charter flights to mining towns and using one type of aircraft, Fokkers.

Alliance aircraft lands in Bundaberg.
Alliance aircraft lands in Bundaberg.


Starting with three aircraft in 2002, ASX-listed Alliance now has the largest fleet of Fokker aircraft in the world - 40 planes seating 50 to 100 passengers.

Alliance competes with Qantas in regional markets and for fly-in fly-out services for mining customers. Alliance, through a codeshare arrangement with troubled Virgin, is also Qantas's only competitor on passenger routes between Brisbane and Bundaberg and Gladstone.

"The Australian aviation industry remains highly concentrated and it is crucial that competition provided by smaller airlines is maintained long-term," said Mr Sims.

He added the watchdog would consider enforcement action if there was evidence that the Qantas shareholding was compromising Alliance's ability to be a strong competitor to Qantas. Qantas has rejected suggestions its stake in Alliance may be anti-competitive

Alliance last month said it expected to report profit in excess of $40 million this year despite the impact of the pandemic on the wider aviation industry. The carrier said it was taking advantage of increased demand from the resources sector and attracting new clients.

It said it was proud of its immediate response to COVID-19, including pioneering measures that have now been adopted broadly across the aviation industry.

These include seating plans to accommodate social distancing, specific cleaning regimes, aircraft filtration systems, passenger temperature testing and the health screening of all passengers prior to check-in at both home ports and mine sites.

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