Pune Media
Leading the news curation and publishing for the world

Australia’s Rex cautiously okays Qantas/Alliance Air merger

Rex – Regional Express (ZL, Wagga Wagga) says the proposed takeover of Alliance Airlines (QQ, Brisbane Int’l) by Qantas (QF, Sydney Kingsford Smith) would not result in a significant lessening of competition in the Australian charter and fly-in-fly-out (FIFO) aviation market. Normally a fierce critic of attempts by Qantas to increase its share of markets, Rex’s surprisingly mild response was contained in a September 7 submission to the Australian Competition and Consumer Commission (ACCC). The ACCC has the power to block Qantas’ takeover bid on antitrust grounds.

Qantas, which has held a 19.9% stake in Alliance Airlines since 2019, launched a bid in May 2022 to acquire a 100% stake. Alliance Airlines is a major player in the lucrative mining and resources charter and FIFO sectors. Qantas and its subsidiary business units, QantasLink and National Jet Systems, also have existing interests in this market.

In a statement of issues released in August, the ACCC said it had significant concerns about the proposed takeover. As part of the decision making process, the ACCC normally calls for submissions from potentially affected parties. In this case, ch-aviation has learned that the ACCC has also actively canvassed other airlines in Australia to get their input on the final decision.

In its submission, Rex said it “does not believe that the Qantas takeover of Alliance (Airlines) will result in a significant lessening of competition as the existing market players (including Virgin Australia Regional (Perth Int’l)) have the capabilities to be able to
compete vigorously for each new tender.”

Rex is closing its deal to buy the charter and FIFO arm of Cobham Aviation on September 30. The circa AUD48 million Australian dollar (USD31.2 million) transaction will see Rex takeover National Jet Express, acquiring its eight DHC-8-Q400s and six E190s and around 15% of the resources/mining charter and FIFO market.

Rex told the ACCC that smaller airlines in the market such as Pionair Australia (PH, Bankstown) and Skippers Aviation (HK, Perth Int’l) were already unable to compete with Qantas in terms of capacity and fleet, so the Alliance Airlines takeover won’t make much difference to them. But Rex adds bigger players such as themselves and Virgin Australia Regional are better equipped to compete.

“Resource companies typically require only one aircraft for any particular tender. Even if a few are needed, this is well within the resources of existing players to supply or to acquire new ones,” the submission reads. “It is to be noted that both the Rex Group and the Virgin Australia Group do FIFO charters and would certainly be prepared to respond to tenders requiring larger aircraft and acquiring new ones if underpinned by the mining contract.”

But Rex isn’t prepared to let the Alliance Airlines takeover go through without some concessions. It said the takeover should be conditional on Qantas allowing other airlines access Australia’s only DHC-8-Q400 simulator (owned by Qantas) and the only E190 simulator (owned by Alliance Airlines). It also wants on-going access to Alliance’s inventory of E190 spares it currently sells to other Australian operators of the type. Rex says the ACCC should also insist that Qantas allows access to the simulators and spares at fair market prices.

“Given Qantas’ indication that it will not continue aircraft wet and dry leasing with their rivals post-acquisition, it is quite likely that it would take the same stance when it comes to simulator access and part sales,” Rex argued.

The ACCC’s final decision on the Alliance Airlines takeover is scheduled for 17 November 2022.

Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.

Aggregated From –

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More