News: AQZ UPDATE 1-Aussie watchdog rejects Virgin Australia-Alliance Aviation charter deal

(Updates with detail on rejection, context on Qantas-Alliance deal)

May 5 (Reuters) - Australia's competition regulator said on Friday it has declined to reauthorise an agreement between Virgin Australia and Alliance Aviation Services (AQZ) to jointly provide fly-in and fly-out (FIFO) services to their corporate clients.

The alliance involves the second and the third largest FIFO charter operators jointly providing and coordinating their services to corporate clients, the Australian Competition and Consumer Commission (ACCC) said.

The charter alliance has not delivered on the public benefits expected when it was authorised to conduct these services together in 2017, the regulator said.

"The airlines have not demonstrated to us that there's sufficient public benefit to outweigh the likely detriment from their proposed coordination, so we have decided not to reauthorise the conduct," ACCC Chair Gina Cass-Gottlieb said.

"We're concerned that continuing the charter alliance is likely to reduce the number of bidders in tender processes for charter services."

While the alliance is likely to benefit public from more operational flexibility for the airlines and some cost savings, "on balance, the ACCC is not satisfied that the public benefits of the agreement outweigh the public detriments", the regulator added.

Last month, the ACCC blocked Qantas Airways Ltd's (QAN) A$611 million ($409.25 million) buyout of Alliance Aviation saying the deal may push prices up and service quality down.

($1 = 1.4930 Australian dollars) (([email protected]; Twitter: https://twitter.com/sameer_manekar))