The Qantas Group intends to boost its recently acquired shareholding in Australian-based charter operator, Alliance Airlines, to a majority, but Virgin Australia has a few reservations.
Qantas announced last week it was taking a 19.9% shareholding in Alliance.
It said Alliance Airlines was a significant service provider to the resources sector, which continued to stimulate travel demand in Western Australia and Queensland in particular.
“Alliance is a profitable, well-managed business with high levels of operational maturity. It is also a long-term provider to the Qantas Group and flies regional services on behalf of the national carrier,” a Qantas statement said.
The 19.9% stake was acquired for an average price of AUD 2.40 per share and for a total cost of AUD 60 million.
Qantas confirmed it expects to ultimately seek regulatory approval from the ACCC to build on its current shareholding, “with a longer-term view of taking a majority position in Alliance Airlines in order to better serve the charter market by unlocking synergies”.
In the meantime, Qantas is supportive of the “business as usual” approach of Alliance Airlines management and is not seeking board representation.
Virgin Australia said the Qantas move raised “significant concerns” and it would be looking closely at the potential impact of the deal on domestic competition.
“Our close commercial relationship with Alliance is important to a strong competitive aviation market, including for regional services in Queensland and charter/FIFO services supporting the mining industry,” Virgin stated.
“We remain committed to our partnership with Alliance who are a strong and important partner for Virgin Australia.”
Virgin Australia has already lodged an objection to a Qantas proposal to share codes with Cathay Pacific on the Hong Kong route. See: Will Qantas reveal secrets of its Cathay codeshare deal?
Written by Peter Needham
QF is clearly applying its bullyboy tactics to try to bankrupt VA and destroy its only Australian competition. First they ignored their Oneworld membership by partnering with Air NZ, a Star Alliance member, in order to break the VA/NZ partnership. Then they partnered with CX so that QF/CX will have significant domination of Aust – HKG services. Now they want Alliance, the carrier VA uses on routes that require jet services but cannot support their large B737 aircraft. Have no doubts whatsoever that if QF gets a majority in Alliance then they will immediately cancel the contracts with VA. It’s simply Big Business and My Joyce at their bullying best and it will only result in less competition and higher prices for the Australian public.
QF is clearly applying its bullyboy tactics to try to bankrupt VA and destroy its only Australian competition. First they ignored their Oneworld membership by partnering with Air NZ, a Star Alliance member, in order to break the VA/NZ partnership. Then they partnered with CX so that QF/CX will have significant domination of Aust – HKG services. Now they want Alliance, the carrier VA uses on routes that require jet services but cannot support their large B737 aircraft. Have no doubts whatsoever that if QF gets a majority in Alliance then they will immediately cancel the contracts with VA. It’s simply Big Business and My Joyce at their bullying best and it will only result in less competition and higher prices for the Australian public.