John Durie: Qantas’s acquisition of Alliance no sure thing as ACCC prepares to detail concerns

The Australian Competition and Consumer Commission (ACCC) is expected to make its concerns clear about the proposed Qantas takeover of Alliance Airlines when it releases a statement of issues on Thursday.

The move was delayed three weeks ago but the ACCC is widely expected to put the deal on hold this week.

Qantas first sought clearance in May last year after the ACCC had earlier cleared its 1999 move to take a 20% stake in the charter service operator.

Alliance has a strong business in the fly-in, fly-out market for mining companies in Western Australia and Queensland .

Qantas argues the charter market is a distinct one with low barriers to entry, but the ACCC has long argued it is a feeder market into the domestic market, of which more than 70% is controlled by Qantas.

Virgin has opposed the deal, arguing removing competition between Qantas and Alliance would entrench Qantas’s market position and potentially lead to more monopoly markets for Qantas in the business and tourist sectors.

Virgin uses Alliance to service the big miners like BHP and Rio Tinto, and if Qantas won control it would be unlikely to lease planes to Virgin.

Alliance this month reported a loss of $7.1 million on revenues of $367.5 million for the last financial year, but it reported strong growth in its wet lease and contract services  up 61% and 21% respectively.

Qantas would be expected to let the ACCC process run its course but it would not surprise if it eventually took legal action to win control of Alliance should the ACCC block the deal.

The next step comes with Thursday’s statement of issues which will detail any ACCC concerns with the deal.