Australia's Competition and Consumer Commission (ACCC) has raised significant concerns regarding the proposed acquisition of Alliance Airlines (QQ, Brisbane International) by Qantas (QF, Sydney Kingsford Smith). In a statement of issues released on August 18, the ACCC says the acquisition could substantially lessen air services competition for corporate customers in rural and remote resource locations.

Qantas purchased a 19.9% stake in Alliance Airlines in February 2019 and has since become its biggest customer, with contracts to wet lease up to eighteen E190 jets. In May 2022, Qantas confirmed its intention to acquire 100% of Alliance Airlines in a deal worth AUD614 million Australian dollars (USD425 million), subject to the ACCC's approvals process.

Brisbane International-based Alliance Airlines generates almost 70% of its annual revenues from fly-in-fly-out (FIFO) contract work for customers in the mining and resources sector. Aside from the FIFO work and wet-lease deal with Qantas, Alliance Airlines also wet leases four Fokker 100 aircraft to Virgin Australia (VA, Brisbane International), flies some regular passenger transport (RPT) routes in Queensland, and does considerable amounts of charter work.

Qantas also does significant FIFO contract work via its Network Aviation (NWK, Perth International) subsidiary and QantasLink brand. Together, the two operators have the largest FIFO market share. If the Qantas/Alliance Airlines deal succeeds, the single entity would dominate the FIFO market.

"Industry participants have expressed strong concerns about the impact of this proposed acquisition on air transport services, particularly to regional and remote areas," said ACCC Chairwoman Gina Cass-Gottlieb.

"(The) proposal to acquire Alliance Aviation has serious implications for competition in Australian aviation markets and consumers will be impacted if competition is reduced," says a Virgin Australia spokesperson. Virgin Australia and its subsidiary Virgin Australia Regional (VA, Perth International) have a FIFO market capacity share of approximately 22%.

The ACCC flagged two further concerns beyond lessening competition for resource and mining customers. Existing areas of overlap include Qantas and Alliance Airlines competing on the Brisbane - Moranbah RPT route and Alliance Airlines wet-leasing aircraft to Virgin Australia which that airline then uses to compete against Qantas on RPT routes.

"The removal of Alliance as a supplier of wet-leases or the increase in price of wet-leases for Qantas’ competitors is likely to significantly increase these barriers,” Cass-Gottlieb said.

In a statement, Qantas says its proposed acquisition of Alliance Airlines would not lessen competition.

"There are a significant number of charter operators of different sizes and that makes it an extremely competitive segment," says Qantas Group Executive of Associated Airlines and Services John Gissing.

"Customers in the resources flying segment are sophisticated and well-resourced companies with procurement expertise who have strong bargaining power in their negotiations with airlines and other operators."

Qantas say they will address the ACCC's concerns. The airline has traditionally enjoyed some success with the ACCC approving acquisitions but the ACCC has recently toughened its stance following criticism of its approvals process.

The ACCC is asking for submissions regarding their Statement of Issues and expects to make a decision regarding the proposed acquisition on November 17.