Australia’s competition watchdog has confirmed that it is looking into the competitive impact of a Qantas move to take a 19.9 percent stake in Brisbane-based resources operator Alliance Airlines.
Australia’s biggest airline announced on February 1 that it paid $A60 million on market for the stake at an average price of $A2.40 per share.
It also signaled that it wanted to take a majority stake in Alliance in the longer term to “better serve the resources market”.
Rival Virgin Australia immediately lashed out at the move, saying it raised “significant concerns”.
Now the Australian Competition and Consumer Commission is having a look to see if the smaller airline is right.
“The ACCC is investigating Qantas’ acquisition of a 19.9 percent stake in Alliance Airlines, to assess whether there has been a breach of section 50 of the Competition and Consumer Act,’’ a spokesperson told AirlineRatings.
“Section 50 prohibits acquisitions which are likely to have the effect of substantially lessen competition in a market.”
Virgin is worried because of its working relationship with Alliance.
“Our close commercial relationship with Alliance is important to a strong competitive aviation market, including for regional services in Queensland and charter/FIFO services supporting the mining industry,” it said at the time.
“We remain committed to our partnership with Alliance, who are a strong and important partner for Virgin Australia.”
The deal appeared to surprise the Alliance board, which issued a statement saying it had not received an approach from Qantas prior to the Flying Kangaroo’s media announcement.
Qantas boss Alan Joyce said the carrier did not intend to have any involvement in the management of Alliance as a result of the 19.9 percent stake or seek a seat on the board.
He conceded that a move to take a majority stake would involve “a complex regulatory process and approval from the ACCC”.