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Qantas Drops $614 Million Alliance Takeover Amid Regulatory Hurdles and Proxy Adviser Concerns

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Qantas Drops $614 Million Alliance Takeover Amid Regulatory Hurdles and Proxy Adviser Concerns

Qantas Drops $614 Million Alliance Takeover Amid Regulatory Hurdles and Proxy Adviser Concerns. Qantas, the Australian airline giant, has officially terminated its $614 million planned takeover of Alliance Aviation, a fly-in, fly-out charter service. The decision comes six months after the competition watchdog opposed the acquisition. Qantas will maintain its 20% stake in Alliance Aviation.

Regulatory Roadblock

The Australian Competition and Consumer Commission (ACCC) first opposed the Alliance transaction in April, following an extensive investigation that highlighted the need to strengthen competition on routes in regional and remote areas of Australia.

Proxy Advisers Reject Qantas Remuneration Plans

In a separate development, Qantas faced a setback in its proposed remuneration plans for senior executives and board members. Three proxy advisers, including Institutional Shareholder Services, joined Ownership Matters and Glass Lewis in recommending that investors vote against the remuneration package at the upcoming annual meeting in November. Institutional Shareholder Services specifically raised concerns about the performance rights of newly appointed Qantas CEO, Vanessa Hudson.

Read Also: Qantas Drops Alliance Airlines Acquisition Plan, Focuses on Expanding E190 Fleet

Shareholder Concerns

Ownership Matters urged shareholders to vote against the re-election of director Todd Sampson, emphasizing his long tenure on the board and marketing background, which they argued increased his responsibility for the company’s reputation decline. While ISS and Glass Lewis did not oppose Sampson’s re-election, they acknowledged concerns about governance and risk oversight.

Watchdog Stringent Approach

The ACCC has taken a stringent approach to airline transactions and collaborations in the wake of the COVID-19 pandemic. It rejected Qantas’s proposed extension of its code-share agreement with China Eastern, citing concerns about potential higher airfares and reduced services.

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Industry Implications

The rejection of the Alliance takeover, as well as other joint-airline rejections, indicates the ACCC’s commitment to maintaining healthy competition in the aviation sector. Airlines in existing partnerships have been put on notice that these agreements may not be approved if they fail to ensure satisfactory competition levels.

Future Partnerships

The rejection of the Alliance deal has raised concerns that other Qantas partnerships, such as those with Emirates and American Airlines, may face increased scrutiny and potential rejection by the ACCC in the future. It’s essential for airlines to navigate these partnerships carefully to maintain a balance between collaboration and competition.

FAQs

Q1) Why did Qantas abandon its takeover of Alliance Aviation?

Ans:- Qantas abandoned its planned takeover of Alliance Aviation due to regulatory opposition from the Australian Competition and Consumer Commission (ACCC). The ACCC conducted a thorough investigation and concluded that the acquisition would not be in the best interest of competition in regional and remote areas of Australia. As a result, Qantas decided that pursuing the deal would require costly legal action, making it no longer worth pursuing.

Q2) What were the concerns raised by proxy advisers regarding Qantas’s remuneration plans for executives and board members?

Ans:- Several proxy advisers, including Institutional Shareholder Services (ISS), expressed concerns about Qantas’s remuneration plans. ISS, in particular, questioned the performance rights of Qantas CEO Vanessa Hudson, citing recent reputational issues.

Ownership Matters and Glass Lewis also recommended that investors vote against the remuneration package, emphasizing governance and risk oversight concerns. These recommendations have raised questions about the future of executive compensation at Qantas.

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Q3) How has the ACCC’s approach to airline transactions impacted the industry, and what does it mean for other partnerships?

Ans:- The ACCC’s stringent approach to airline transactions, including the rejection of the Alliance takeover, signifies the regulator’s commitment to maintaining healthy competition in the aviation sector, especially in regional and remote areas. Airlines in existing partnerships have been put on notice that their agreements may not be approved if they fail to ensure satisfactory competition levels.

This has raised concerns about the future of partnerships involving Qantas, such as those with Emirates and American Airlines, and whether they may face increased scrutiny and potential rejection by the ACCC in the future.

Read Also: Investigation Reveals Alleged Tax Evasion by Foreign Airlines in India

Conclusion 

Qantas’ abandonment of the Alliance Aviation takeover reflects the challenges posed by regulatory hurdles in maintaining healthy competition. The ACCC’s stringent approach carries implications for the airline industry’s future partnerships and executive compensation.

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Qatar Airways

Qatar Airways Plans to Offer Complimentary Starlink Internet Details Yet to Be Disclosed

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Qatar Airways Plans to Offer Complimentary Starlink Internet Details Yet to Be Disclosed

Qatar Airways Plans to Offer Complimentary Starlink Internet Details Yet to Be Disclosed. In a recent development, Qatar Airways, a long-standing user of Inmarsat-now-Viasat Global Xpress (GX) Ka-band satellite-based inflight connectivity service, has indicated its intention to offer SpaceX’s Starlink Aviation onboard Internet to its passengers on a complimentary basis. This offering will be accessible to passengers with a simple “one-click” process.

Read Also: Air Travel in Australia Senate Inquiry, Qantas, and the Shifting Aviation Landscape

Rollout on Specific Aircraft and Routes

According to an official press release from Qatar Airways, the low-latency In-Flight Connectivity (IFC) service will be introduced on “specific aircraft and routes.” The airline has also mentioned that they are currently in the pre-launch phase of the rollout strategy in collaboration with Starlink. SpaceX Vice President of Starlink Commercial Sales, Jonathan Hofeller, has expressed that Starlink is “set to support the entire Qatar Airways fleet.”

This news emerged following the APEX/IFSA Global EXPO event in Long Beach, where Qatar Airways Group’s Chief Executive, His Excellency Mr. Akbar Al Baker, was honored with a Lifetime Achievement Award. During this event, Starlink executives met with airline representatives in a nearby hotel.

Changing Landscape in In-Flight Connectivity

The Qatar Airways-Starlink collaboration signifies a shift in the in-flight connectivity landscape. Traditional GEO satellites are being challenged by Low Earth Orbit (LEO) constellations like SpaceX’s Starlink. For example, Flexjet has announced plans to replace the Viasat hardware on some of its aircraft with Starlink.

Viasat acquisition of Inmarsat, coupled with these changes, has led to some Inmarsat value-added resellers reevaluating their positions. SITA, a service provider to Qatar Airways, has already disclosed its intention to exit the cabin connectivity market by January 2025.

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Read Also: Qantas Loyalty Chief Olivia Wirth Resigns Amidst Ongoing Leadership Transition and Controversies

Seeking Clarity from Qatar Airways

Runway Girl Network reached out to Qatar Airways to seek clarification on several points. They inquired about:

  • Qatar Airways plan regarding the replacement of Inmarsat (now Viasat) GX inflight connectivity hardware with Starlink.
  • Whether Starlink will be deployed across Qatar Airways’ entire fleet.
  • Commencement dates for supplemental type certifications and Starlink installations.
  • Which aircraft type will be the first to receive the new hardware.
  • The impact of SITA’s decision to cease being a GX value-added reseller on Qatar Airways’ decision to select Starlink.
  • Qatar Airways’ plans for continuing to roll out Inmarsat GX on its 787-9s.

Qatar Airways Response

In response to these queries, a Qatar Airways spokesperson stated via email that they would keep Runway Girl Network updated on any future operational developments. In a follow-up exchange, when further clarity on the deal was sought, the spokesperson requested the removal of a specific phrase from their press release.

Implications and Future Plans

In the absence of comprehensive details, it seems logical for Qatar Airways to consider introducing Starlink initially on its 787-8s. This fleet has seen recent in-seat In-Flight Entertainment (IFE) upgrades but still lacks true broadband connectivity.

Once Starlink is operational on Qatar Airways aircraft, passengers can anticipate complimentary access to ultra-fast Wi-Fi speeds of up up to 350 Mbps, which can be used for various Internet-based services including video streaming, gaming, web browsing, and more. In contrast, the airline presently charges $10 for inflight access to its ‘Super Wi-Fi.

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Read Also: Qatar Airways Elevates In-Flight Connectivity with Starlink Partnership

Conclusion

Qatar Airways, in its press release, also proudly asserts its position as “the largest airline to collaborate with Starlink.” Other notable Starlink customers include Part 135 operator JSX, Hawaiian Airlines (launch delayed until early next year), airBaltic, and ZIPAIR.

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