Qantas scraps $611 million plan to buy out charter operator Alliance Aviation

Qantas has announced it will no longer proceed with a multimillion-dollar move that would have seen it take over an Aussie charter company.

Qantas is no longer acquiring Alliance Aviation Services after the pair decided to walk away from their May 2022 agreement.

The agreement would have seen Qantas fully take over the Queensland-based FIFO operator in a $611 million move.

But in a joint statement released on Thursday, both airlines said there was no “reasonable path forward for the deal” with the decision coming months after the Australian Competition and Consumer Commission (ACCC) formally opposed the acquisition.

It said the deal was likely to push prices up and service quality down and suspected the acquisition would make it even more difficult for other airlines to enter or expand operations in regional and remote areas.

Qantas has dropped out of its plan to acquire charter flight operator Alliance Aviation Services. Picture: iStock

The two airlines, however, believe the buyout would have had a positive influence on customer value without negatively affecting competition in the resources sector.

“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,” the statement read.

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

Both airlines acknowledged that ‘there is no reasonable path forward for the deal at present’. Picture: Facebook

ACCC chairwoman Gina Cass-Gottlieb previously said the competition regulator had received complaints about the proposition from industry participants concerned over what it could mean for regional and remote areas.

“We are concerned that this proposed acquisition is likely to substantially lessen competition for air transport services to and from regional and remote areas in Queensland and Western Australia for corporate customers,” she said in August.

It comes months after Australia’s competition regulator blocked the deal saying it was likely to push prices up and service quality down. Picture: Andrew Henshaw

“This merger would combine two of the top three operators of air transport services in Queensland and Western Australia.”

If the merger went ahead, the ACCC said there would be no other competition on the Brisbane-Moranbah regional passenger transport route.

Qantas will still, however, retain a near 20 per cent stake in Alliance. Picture: Facebook

Meanwhile, Qantas will still own a 20 per cent stake in Alliance and said it will continue to serve the growing resources sector through its existing charter operations – it currently has about 27 per cent of the total charter market.

It will also continue its long-term agreement that sees Alliance operate up to 30 E190s for the Qantas Group.

According to John Gissing, Qantas Group executive of associated airlines and services, the airline will be exercising an option for four additional E-Jets under its agreement, which will bring the total number of E190s operated by Alliance on Qantas’ behalf to 26. The planes are expected to enter the Qantas fleet by April next year.

“Alliance is an important partner for the Qantas Group and the E190s have helped us open new routes across Australia,” he said.

“These four new aircraft will provide additional capacity and connectivity in the domestic market.”

Alliance managing director Scott McMillan said that despite the outcome, the mining charter operator looked forward to “continuing its longstanding and productive relationship with Qantas”.