Union flags higher regional airfares if ACCC allows Qantas-Alliance deal

Qantas’ planned purchase of smaller operator Alliance has been dealt a blow by the flying kangaroo’s major nemesis, the TWU.

The Transport Workers Union has told the competition watchdog the sale of Alliance Aviation to Qantas would mean higher fares and poorer service for regional travellers and FIFO workers.

The Australian Competition and Consumer Commission is examining the proposed $614m deal ahead of its final verdict due in December.

Qantas CEO Alan Joyce first made it known he was interested in acquiring Alliance in early 2019 after taking a 19.9 per cent stake in the smaller operator.

An acquisition agreement with Alliance was reached in May this year, with an offer of $4.75 worth of Qantas shares for each Alliance share held.

Of particular interest to Qantas, was Alliance’s significant number of contracts with resource companies to provide fly-in, fly-out services in Western Australia and Queensland.

Alliance Aviation acquisition of Embraer 190 jets during the pandemic has only made the airline more attractive to stakeholder Qantas. Picture: James D. Morgan/Getty Images

In a strongly worded submission to the ACCC, the 70,000-member TWU said it held serious concerns about the proposed acquisition and what it would mean for travellers, workers and the future of Australian aviation.

Penned by national secretary Michael Kaine, the submission said Qantas had “a long history of undermining competition by deploying its market dominance to overwhelm its competitors, influencing the government of the day to bend to its will and pressuring suppliers to reduce costs”.

TWU national secretary Michael Kaine. Picture: NCA NewsWire/Nikki Short

With Alliance currently providing wet lease services for Virgin Australia, Mr Kaine said there was a very real risk the sale to Qantas would raise the cost of supplying regional services.

“The loss of direct competition between Qantas and Alliance reduces the capacity for

another airline to scale up or enter the market,” he wrote.

“It will also constrain other airline’s ability to compete with Qantas for corporate customers and allow Qantas to further dictate terms to its suppliers, further dragging down standards across aviation.”

Qantas has previously dismissed claims the acquisition would reduce competition pointing out Alliance represented around 2 per cent of the total Australian aviation industry.

Qantas group executive of associated airlines and services John Gissing said Australia had one of the “most pro-competitive aviation industry in the world … with a significant number of charter operators of different sizes”.

“That makes it an extremely competitive segment,” Mr Gissing said.

It was estimated Alliance supplied about 30 per cent of the charter services with remainder split between Qantas (around 23 per cent) and Virgin Australia (around 22 per cent) and several other operators.

Rival airline Rex also shared its submission to the ACCC disputing several of the issues raised by the watchdog.

“Rex does not believe that the Qantas takeover of Alliance will result in a significant lessening of competition as the existing market players (including Virgin Australia Regional Airlines) have the capabilities to be able to compete vigorously for each new tender,” wrote general manager of corporate services Irwin Tan.

“However, Qantas has demonstrated that it will not hesitate to resort to unfairly exercising its market power where it is not able to win based on its pricing and efficiency.”

The TWU and Qantas have a history of butting heads, with the union last year winning a Federal Court case over the airline’s outsourcing of more than 1600 ground handling jobs.

An appeal to the Full Federal Court also went in favour of the TWU and Qantas has since applied to the High Court for special leave to appeal the decision.

The ACCC is not publishing submissions received in its investigation of the Qantas-Alliance deal after previously releasing a “statement of issues” raising concerns about the sale.

It’s understood the majority of Alliance shareholders are in favour of the sale and the matter is not on the agenda of the airline’s upcoming AGM next month.

Immediately after the deal was announced in May, Alliance shares leapt to a high of $4.25 but have since slumped to $3.16.

Qantas shares were trading at $5.14 on Tuesday, down from $5.80 when the acquisition announcement was made.

Originally published as Union flags higher regional airfares if ACCC allows Qantas-Alliance deal