Qantas and American Airlines file application to form joint business

Qantas and American Airlines have filed a new application with the US Department of Transportation (DOT) seeking approval to form a joint business to better serve customers flying between North America and Australia and New Zealand.

The proposed joint business will significantly improve service, stimulate demand and unlock more than $USD 300 million annually in consumer benefits that are not achievable through any other form of cooperation, including:

• Up to $USD 221 million in value from expanding codesharing between American and Qantas – opening more connections to more destinations.
• Up to $USD 89 million in value by offering a wider range of fare classes across each other’s networks, including lower fares and discounts.

The joint business will also give American and Qantas the opportunity to launch additional routes between the US and Australia and New Zealand, including new flights to city pairs currently not served by either carrier.

An expanded relationship will encourage significant improvements in the overall customer experience, including more improved frequent flyer benefits and investments in lounges, baggage systems and other infrastructure designed to better serve the carriers’ joint customers.

All these benefits will stimulate significant demand for new travel – generating up to 180,000 new trips between the US and Australia and New Zealand every year.

Critically, if the joint business is not approved, American and Qantas will have no choice but to further reduce codesharing on their networks. This will jeopardise the number of services and routes each carrier flies between the US and Australia and New Zealand.

For example, Qantas may be forced to reduce the frequency of, downgauge or potentially cancel its A380 service between Sydney and Dallas/Fort Worth, and American may further reduce its services between Los Angeles and Sydney and Auckland. These routes rely on codeshare support from each airline’s feeder network via their respective hub cities to be economically viable.

American and Qantas look forward to working together to deliver new routes, a more seamless travel experience, and greater access to lower fares under a joint business.

Background:

• The United States Department of Transport issued Qantas and American a tentative Show Cause Order in 2016 proposing not to grant approval for their original application.
• It was both airline’s view that the 2016 decision did not take into account precedent, intense competition on the Trans-Pacific route and the benefits a closer relationship between the two carries had already delivered and would deliver going forward, including new routes.
• The airlines committed to filing a new application after carefully reviewing the Order.

27 February 2018

Photos: copyright (c) Qantas / Ivan Coninx