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By Jamie Freed
SYDNEY, Aug 18 (Reuters) – Australia’s competition regulator said on Thursday that Qantas Airways Ltd’s QAN.AX proposed purchase of the remainder of charter operator Alliance Aviation Services Ltd AQZ.AX for A$610.8 million ($423.41 million) raised concerns.
“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,” Australian Competition and Consumer Commission (ACCC) Chair Gina Cass-Gottlieb said in a statement.
Qantas has owned 20% of Alliance since 2019 but buying the remaining 80% would give it a dominant share of flying for resources industry customers, a market in which it competes against Virgin Australia and Cobham’s National Jet Express, soon to be owned by Regional Express Holdings Ltd REX.AX.
Many mining and oil and gas companies in Australia staff their operations using a fly-in/fly-out (FIFO) model rather than permanently basing their employees at remote sites, making the flying a lucrative business for airlines.
Qantas has offered Alliance investors A$4.75 a share for the remainder of the company in an all-stock deal.
Alliance shares last closed at A$3.55 on Wednesday, indicating investor scepticism that the regulator would approve the transaction.
Qantas said on Thursday it reaffirmed its view that the Alliance acquisition would not lessen competition in the charter market.
Alliance represents only around 2% of total aviation industry capacity but it supplies around 30% of charter services, followed by Qantas with 23% and Virgin at 22%, Qantas said in a statement.
($1 = 1.4426 Australian dollars)
(Reporting by Jamie Freed; Editing by Muralikumar Anantharaman and Jacqueline Wong)
((Jamie.Freed@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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