Alliance Aviation Services managing director Scott McMillan has told the Senate Air Inquiry said Alliance Airlines were not aware of Qantas's bid for a 19.9 per cent stake in their business.
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Mr McMillan told the Senate hearing the Qantas bid, now subject to an ACCC investigation, was an "unwelcome advance".
"(We) are in a fairly difficult position," Mr McMillan said at the Brisbane hearing last Friday.
"We are directors of a public company, we don't know what the ACCC's going to do with Qantas's stake and we have a very significant business relationship with Virgin."
Mr McMillan told the Inquiry into the cost of regional air travel Alliance Airlines were mostly a charter operator and not responsible for flight prices on routes such as Mount Isa to Brisbane.
"We call it wet lease, some call it ACMI (aircraft, crew, maintenance, and insurance)," Mr McMillan said.
"We provide the aircraft, the crew, the maintenance and the insurance, and the marketing carrier—whether that's Virgin or Qantas or some other—is responsible for pricing.
"We simply charge a fee. All of the rest of it, the fuel, the air navigation charges, the catering and so on, is paid by the marketing carrier."
Mr McMillan said the FIFO business was the core of what they did in the long-term charter space and timetables were generally set months in advance.
"We operate for South32 to Cannington," he said.
"We operate services for them from Cairns, Townsville and Brisbane. That is an integrated schedule to move people backwards and forwards between those three centres. That schedule very rarely changes."
Mr McMillan said their flights for Qantas and Virgin were typically short-term wet lease charters
"A good example was what we did for Qantas yesterday (February 14) out of Mount Isa," he said.
"I don't think they even rang us—they sent us an email saying, 'Can you do this flight for us tomorrow; we're unable to do it.' That's a service we are able to provide to anyone."
Mr McMillan said airport costs were a significant proportion of costs, almost as much as fuel.
"On a closed charter for us into Cloncurry, if we're operating that for our big customer up there—Ernest Henry Mining—if we are full on the way in and full on the way out, and we don't need security because it's a closed charter, we hand over a check for $10,400 to the Cloncurry shire," he said.
"So when you're looking at airfare costs, the head tax that you pay to the local council is a significant proportion of it. In what we billed them, and I looked it up yesterday, for their charters in January, 30 per cent of the costs we billed them for were airport charges for Brisbane, mainly Cloncurry, Cairns and Townsville."
Mr McMillan said the "unfettered nature" of airport charges was a a concern and the Productivity Commission's conclusion they're not going to look into the regulation of airports was a mistake.
"Irrespective of whether it's a full economy airfare or a very discounted fare, the head tax is the same; the amount that the airport charges is the same," he said.
"The lower the fare, the higher the proportion of money that goes to the local government."
Mr McMillan also criticised the Queensland government for not sharing information about when regulated route contracts were up for renewal so they could bid for them.
Senator Rex Patrick told them the Queensland government had no authority to withhold that information.
"Dates of contract ending cannot be commercial-in-confidence. They can only disadvantage people like you who want to join into a competition," Senator Patrick said.
Mr McMillan also said there was no pilot shortage in Australia, but rather "a pilot training blockage" which he blamed on aviation regulatory reform.
"In the pilot training area, it's been an absolute disaster," he said.
"There's a whole heap fewer pilot training centres in Australia than there used to be. Many of them are foreign owned and they're only training pilots for their own operations elsewhere and the number of training establishments has shrunk considerably."
Mr McMillan said some Australian regulatory requirements were absurd.
"There were no safety issues; there wasn't a number of accidents or anything," he said.
"But the unintended consequence of what CASA have done with some of their regulations has caused this issue."
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Derek Barry
Editor of the North West Star Mount Isa since January 2016. Prior to that, an editor at several regional southern Queensland newspapers. Passionate about telling local stories. Comes with a strange accent to due an Irish accident of birth.
Editor of the North West Star Mount Isa since January 2016. Prior to that, an editor at several regional southern Queensland newspapers. Passionate about telling local stories. Comes with a strange accent to due an Irish accident of birth.
