Qantas has officially withdrawn its bid to acquire the fly-in, fly-out charter service Alliance Aviation, a deal valued at $614 million, after facing regulatory opposition. The Australian Competition and Consumer Commission (ACCC) had voiced concerns about the deal earlier this year, and both ASX-listed airlines, Qantas and Alliance Aviation, have now decided it is no longer viable to pursue the acquisition. Instead, Qantas will maintain its existing 20% stake in the charter airline.
The ACCC’s objections stemmed from the need to bolster competition on routes in regional and remote areas of Australia, prompting them to oppose the acquisition in April. The regulatory process was further complicated by four delays from the ACCC, which initially received the acquisition proposal in April 2022.
The termination of the deal was deemed to be in the best interest of Alliance Aviation and its investors, as continuing to pursue competition clearance would require significant additional resources for complex and contested court proceedings. Regional Express successfully acquired fly-in, fly-out operator National Jet Express for $48 million in September 2022, indicating a more competitive landscape in the sector.
Despite the approval of some acquisitions, the ACCC has increased its scrutiny of competition and collaboration within the airline industry due to the disruptions caused by the COVID-19 pandemic. This year, several joint airline proposals, including the Alliance takeover, have faced rejection.
This decision reflects the growing reluctance of the ACCC to approve partnership-style arrangements among airlines if they potentially compromise competition. Qantas has been operating with conditional approval for some of its existing partnerships, and the ACCC’s stance could impact the renewal of such agreements.
It’s important to note that the ACCC denied Virgin Australia’s bid to renew its partnership with Alliance Aviation, emphasizing the need to maintain balance and competition within the aviation sector. In this environment, Qantas will need to navigate its existing partnerships, including those with Emirates and American Airlines, carefully, as they approach renewal.
The rejection of Qantas’s attempted extension of its code-share agreement with China Eastern earlier this year suggests that the ACCC is maintaining a vigilant approach to partnerships within the airline industry. While Qantas currently faces regulatory challenges, the industry is evolving, and airlines must adapt to the changing landscape.
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