Australia blocks Qantas’ purchase of Alliance Aviation Services

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Australia’s competition regulator blocked Qantas Airways $611 million ($409 million) buyout of charter flight operator Alliance Aviation Services, curtailing the airline’s ability to tap demand from the resources sector.

The Australian Competition and Consumer Commission (ACCC) said the pair competed in the so-called fly-in, fly-out domestic markets of mining-rich Queensland and Western Australia states, and the deal may push prices up and service quality down, Reuters reported.

The ruling is one of the first major deal rejections by the ACCC under new chair Gina Cass-Gottlieb, and presents a hurdle for Qantas to dominate a market connected to the engine of the Australian economy.

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“Regardless of today’s decision, Qantas and Alliance have a strong commercial relationship, and we expect this to remain unchanged,” said Ord Minnett analyst Phillip Chippindale in a research note.

Chippindale said the decision appeared to contradict the ACCC assertions that top miners enjoyed strong bargaining power, and that he expected the companies to appeal in Federal Court.

Qantas, which bought 20% of Alliance without regulator objection in 2019, said it was seeking a meeting with the ACCC. It called the ruling “at odds with the increasingly competitive nature of the segment”.

Alliance said there was a “strong industrial logic” for it to be a part of the Qantas group and that it would closely consider its options before deciding on future steps.