The Australian Competition and Consumer Commission (ACCC) has voiced its preliminary concerns that the acquisition of a 19.9% stake in Alliance Airlines (QQ, Brisbane International) by Qantas (QF, Sydney Kingsford Smith) could be harmful to the market.

"Alliance Airlines is a close, important and growing competitor to Qantas, including through its partnership with Virgin Australia (VA, Brisbane International). It provides consumers and companies with a crucial alternative to Qantas in markets that are already highly concentrated,” ACCC Chair Rod Sims said in the commission's press release.

The ACCC will continue to investigate the transaction.

"We consider this shareholding has the potential to impact Alliance's future growth and its ability to be a strong competitor. It may impact Alliance's ability to grow through raising funds from investors, or to consider rival takeover approaches. It may also impact whether Alliance’s customers perceive it to be an independent rival to Qantas," Sims added.

The ACCC is particularly concerned about the competition on charter flights on behalf of the resources sector, operating as the so-called "fly-in-fly-out" operations. Alliance Airlines operates these flights both under its own brand and in cooperation with Virgin Australia, directly competing with Qantas. Alliance Airlines and Qantas are also direct competitors on services from Brisbane International to Bundaberg and Gladstone.

Qantas bought the minority stake in Alliance Airlines in February 2019, thus becoming the latter airline's single largest stakeholder. The airline said at that time that it had not sought any management control or a board seat and would remain a passive investor in Alliance.

"We do not believe there is any evidence of a lessening of competition as a result of our minority stake, nor any reasonable prospect that there will be. To the contrary, Alliance Aviation has extended the services it offers to the market in recent months. Qantas has invested in Alliance because it is a profitable, well-managed business with attractive levels of exposure to the resurgent resources charter market," the flag carrier said in a press release.

Qantas added that while it had no plans to reduce its stake in Alliance Airlines, it would also refrain from buying any more shares until the ACCC investigation is ended. CEO Alan Joyce told ch-aviation earlier this year that Qantas would be interested in a full takeover of Alliance Airlines eventually.