ACCC QF Alliance concerns

THE Australian Competition and Consumer Commission (ACCC) says it’s continuing to investigate the acquisition of a 19.9% stake in Alliance Aviation by Qantas, today issuing a statement 16 months after QF conducted its share purchase which blindsided the carrier and its regional partner Virgin Australia (TD 01 Feb 2019).

ACCC Chairman Rod Sims said the update was being provided “in response to queries by various stakeholders”.

“The Australian aviation industry is in a state of major upheaval and now, more than ever, we are concerned that competition by smaller airlines is not hindered,” Sims said.

“We will continue to seek information from market participants to gauge any impacts on competition arising from Qantas’ stake in Alliance”.

Sims noted that Alliance was a close competitor to Qantas, particularly in regional markets and for fly-in fly-out services for mining customers.

Virgin Australia’s codeshare relationship with Alliance means it’s the only competitor on several passenger routes, with Sims saying QF’s decision to purchase 19.9% of the company without first seeking ACCC clearance meant this was an “enforcement review” rather than a standard merger investigation.

“Acquiring a strategic stake in a close competitor in such a concentrated market raises clear competition returns,” he said, with the ACCC to consider enforcement action if there is evidence that the QF shareholding is compromising Alliance’s ability to be a strong competitor to Qantas,” he said.

“Our current view is that any further increase in Qantas’ stake in alliance is very likely to raise significant competition concerns.”