Australian regulator raises concerns on Qantas buying out charter operator (updated)

Alliance Aviation Services

18/08/2022 01:15

(Adds details of Qantas stake in Alliance, market share)
    By Jamie Freed
    SYDNEY, Aug 18 (Reuters) - Australia's competition regulator
said on Thursday that Qantas Airways Ltd's  QAN.AX  proposed
purchase of the remainder of charter operator Alliance Aviation
Services Ltd  AQZ.AX  for A$610.8 million ($423.41 million)
raised concerns.
    "We are concerned that this proposed acquisition is likely
to substantially lessen competition for air transport services
to and from regional and remote areas in Queensland and Western
Australia for corporate customers," Australian Competition and
Consumer Commission (ACCC) Chair Gina Cass-Gottlieb said in a
statement.
    Qantas has owned 20% of Alliance since 2019 but buying the
remaining 80% would give it a dominant share of flying for
resources industry customers, a market in which it competes
against Virgin Australia and Cobham's National Jet Express, soon
to be owned by Regional Express Holdings Ltd
 REX.AX . urn:newsml:reuters.com:*:nL4N2YU3JH
    Many mining and oil and gas companies in Australia staff
their operations using a fly-in/fly-out (FIFO) model rather than
permanently basing their employees at remote sites, making the
flying a lucrative business for airlines.
    Qantas has offered Alliance investors A$4.75 a share for the
remainder of the company in an all-stock deal.  urn:newsml:reuters.com:*:nL3N2WW3KV
    Alliance shares last closed at A$3.55 on Wednesday,
indicating investor scepticism that the regulator would approve
the transaction.
    Qantas said on Thursday it reaffirmed its view that the
Alliance acquisition would not lessen competition in the charter
market.
    Alliance represents only around 2% of total aviation
industry capacity but it supplies around 30% of charter
services, followed by Qantas with 23% and Virgin at 22%, Qantas
said in a statement.
($1 = 1.4426 Australian dollars)

 (Reporting by Jamie Freed; Editing by Muralikumar Anantharaman
and Jacqueline Wong)
 ((Jamie.Freed@thomsonreuters.com;))