Mayor Jenny Hill says Qantas’ failed Alliance take over good news for regions

An NQ leader says Qantas’ failed bid to take over Alliance is good news for consumers. Here’s why.

Qantas’ failed attempt to take over Alliance has been labelled a positive for North Queenslanders after concerns it could make flying to and from Townsville even more expensive.

The major airline will not take its fight to buy Alliance to court after the Consumer Commission opposed the deal.

The consumer watchdog opposed Qantas’ $614m acquisition of Alliance Aviation Services in April, saying Alliance was an important competitor to Qantas, and a deal would “substantially lessen competition” in the Queensland and West Australian resources sectors.

Townsville Mayor Jenny Hill, who was a strong opponent of the deal, said the failed takeover was great news for regional business and consumers.

“Let’s be honest, the last couple months the media has exposed some of the practices of Qantas under (former chief executive Alan) Joyce, and the whole board,” Cr Hill said.

The High Court has upheld a Federal Court ruling that Qantas illegally sacked 1700 ground handler jobs during the Covid-19 pandemic. The ACCC has launched court action alleging Qantas engaged in false, misleading or deceptive conduct, by advertising tickets for more than 8000 flights that it had already cancelled but not removed from sale.

An Alliance Aviation Services flight coming in to land at the Townsville airport on Thursday. Picture: Shae Beplate

“Everyone is questioning how the hell did they get away with some of the things they’ve allegedly done, so why would we give them a stronger hold on the Australian market,” the Mayor said.

Cr Hill previously told the Bulletin that the take over would be a disaster for Townsville and it would “distort” the market.

“People living in regional Queensland expect and deserve affordable airfares and greater choice — they should not be worse off than those living in capital cities,” she said in September 2022.

Alliance has 70 planes and hubs in Adelaide, Brisbane, Cairns, Perth and Townsville.

ACCC chair Gina Cass-Gottlieb opposed Qantas taking over Alliance. Picture: NCA NewsWire/Christian Gilles

The carrier flies to and from South 32’s Cannington Mine, Cloncurry, Phosphate Hill about 140 kilometres south of Cloncurry, Cairns, Townsville and Hamilton Island.

“Both companies believe the acquisition would have created customer value without lessening competition in the highly competitive resources sector – particularly through the efficiencies created through a combined fleet of F100 aircraft,” Qantas and Alliance told the ASX in a joint statement on Thursday.

Qantas flies about 27 per cent of resource sector charter flights.

“However, both companies acknowledge that there is no reasonable path forward for the deal at present,” it says in the announcement.

Incitec Pivot‘s Phosphate Hill fertiliser manufacturing plant at Selwyn, about 140kms south of Cloncurry.

Alliance directors consider terminating the transaction was in the best interest of shareholders given contested court proceedings would be extensive and complex, Alliance says in a separate announcement to the exchange.

Qantas retains its 19.73 per cent stake in Alliance, and will exercise options for four additional aircraft, meaning Alliance operates 26 E190s for Qantas.

In opposing the deal earlier this year, ACCC chair Gina Cass-Gottlieb said “Qantas and Alliance currently strongly compete with each other in markets where there are few effective alternatives”.

An acquisition would combine two of the largest charter services in Queensland and WA, she said.

“Flying workers in the resource industry to and from their worksites is an essential service for this important part of the Australian economy, so it is critical that competition in this market is protected,” Ms Cass-Gottlieb said.

The ACCC found it is unlikely a new or existing airline could expand quickly to a scale that would address the loss of competition resulting from the proposed acquisition.

“Qantas will face limited competition if allowed to acquire Alliance because most other airlines lack the right aircraft, fleet size, or capabilities needed to compete effectively,” Ms Cass-Gottlieb said.

There are 14 Alliance flights in and out of Townsville scheduled for the next week from Thursday.

Alliance’s share price ($3.16) was up 0.3 per cent on Thursday afternoon, while Qantas was down 3.29 per cent ($4.70).

Originally published as Mayor Jenny Hill says Qantas’ failed Alliance take over good news for regions