Does Qantas make for an unhealthy Alliance?

AUSTRALIA’S consumer watchdog says it is continuing to investigate competition concerns from Qantas buying a stake in competitor Alliance Aviation in 2019.

The Australian Competition and Consumer Commission (ACCC) said that, given the “state of major upheaval” the Australian aviation industry was in, now more than ever it was “concerned that competition by smaller airlines is not hindered”.

The ACCC said it would continue to seek information to gauge any impacts on competition arising from Qantas’s stake in Alliance.

It launched an investigation last August, months after Qantas acquired a 19.9 per cent stake in Alliance. Qantas has said it would seek approval to increase its shareholding and plans to be the majority owner.

“Qantas’s decision to complete the acquisition of the 19.9 per cent stake in Alliance without first seeking ACCC clearance means this is an enforcement investigation rather than a standard merger review,” ACCC chairman Rod Sims said.

Brisbane-based Alliance has particularly challenged Qantas in regional markets and by providing fly-in, fly-out services for mining companies. The ACCC said the Qantas move could reduce supply of these charter services, and regular passenger services.

It is investigating whether Qantas’s stake affects Alliance’s ability to raise funds, consider takeovers or participate in commercial ventures, and whether Qantas is attempting to exert influence on Alliance.

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