I wonder whether the decision this week by AQZ to compete with...

I wonder whether the decision this week by AQZ to compete with the current Qantas monopoly of flights to Moranbah is strongly motivated by an attempt to convince the ACCC that QAN isn’t exerting any influence over AQZ and it’s shareholding isn’t resulting in a lessening of competition.

This could be crucial in the short term if AQZ has its sights on acquiring Virgin Australia Regional Airlines, which would require ACCC approval. While AQZ previously received approval to operate a partnership with Virgin on FIFO work, QAN didn’t own 20% of AQZ at the time the initial approval was granted in 2017. So the $64 question is how the ACCC views any fresh application (or a renewal application for the current Virgin partnership approval which expires on 9 June 2022) by AQZ for any business that competes with QAN.

The ACCC announcement on progress with their review of the QAN shareholding in AQZ released on 1 June 2020 refers to enquires by various stakeholders:

https://www.asx.com.au/asxpdf/20200601/pdf/44j8hbv061ts8k.pdf

I assume these enquires included AQZ seeking to understand ACCC’s current view. The uncertainty as of today on what Virgin 2.0 looks like in terms of its completion with QAN also likely raises further concerns that would have the ACCC seeking to limit any further increase in QAN’s market position. Therefore AQZ’s future business acquisitions are likely to run into hurdles if ACCC think QAN have any influence over AQZ. Competing head on with QAN to Moranbah has the advantage of helping to demonstrate that AQZ is independent.

AQZ growing its business organically (as has been the case with the three recent new route announcements) presumably is outside of any ACCC jurisdiction, although obviously will have some bearing when AQZ needs to apply to the ACCC for approval to acquire another existing business or renew the current Virgin partnership approval.

While the ACCC uncertainty remains, the owners of the other 80% of AQZ are currently disadvantaged by QAN owning 20%. QAN’s interests are presumably being served by any current limitations on the ability of AQZ to grow its business. It would be useful in my opinion if the ACCC could reach a conclusion to its current enquires and either require QAN to sell its AQZ shares or conclude that QAN doesn’t exert any influence over AQZ.