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For some, a recent Hitler parody video explains all that is wrong with Qantas. But for those wanting a more insightful and accurate account, look no further than 13 words chief executive Alan Joyce delivered last week about Qantas International: "It has achieved its required returns only three times in the past 15 years."

And if you think the figures are cooked, Joyce adds that "the good years have not been good enough to offset the bad."

The statement begs the question how Qantas managed that record and did not think it prudent prior to February to announce it would return its international division to profitability.

It also partially exonerates Joyce as Mascot's persona non grata since the problems he face are not ones he exclusively created but rather inherited from predecessors including Geoff Dixon and James Strong, the latter of whom resides on the Qantas board. Perhaps that explains why Joyce chose to reveal such an unflattering record.

Joyce was barely two and half years into his tenure when he announced a turn-around for the international division, details of which will be made public at the carrier's 24 August annual results briefing. While it can be asked why Joyce waited 2.5 years, it should also be asked why Strong and Dixon, let alone the board, never bothered.

Perhaps the answer is complacency. Qantas had a domestic monopoly, and more recently a frequent flyer programme, that could prop up a loss-making international network. Cue the statement, "The Qantas Group has made an annual profit every year since 1995, a claim only two other major full service carriers can match."

The international network was critical as it gave the staple domestic passengers and corporations international flight options, thus creating a seamless single-carrier preference. As Qantas said in its application to the ACCC for a joint business agreement with American Airlines, "the viability of Qantas' entire portfolio of businesses depends on a viable international business."

But the status quo is no more. The trans-Pacific duopoly has ended and Asian and Middle Eastern carriers with lower cost bases have entered. What is not said is the future of Qantas domestic. While it may continue to be profitable, the yields and revenue volume should shrink as a result of Virgin Australia's entry into the corporate market.

Qantas, however, spent years--at least 15--being complacent. That is how a middle seat almost became standard in business class, enhanced benefits are only now being implemented with American Airlines, and, for an anecdotal reference, how flight attendants failed to pick up a dirty spoon.

Oman Air's plan to codeshare to Australia with Malaysia Airlines (MAS) has been put on hold following the latter's intention to join the Oneworld alliance from late 2012, as we reported on our Air Transport Intelligence service.

The Omani national carrier had been in discussions with MAS to establish a virtual network serving Australia, a spokesman said. Oman Air intended to place its WY code on MAS' flights to Australia from Kuala Lumpur, where Oman Air flies to four times a week. Oman Air already codeshares with MAS from Kuala Lumpur to other Malaysian and regional destinations.

"They have just announced their plan to join the Oneworld alliance in 2012 and have told us that they cannot discuss new codeshares at the moment," the spokesman said.

He affirmed the carrier's "preference would still be to serve Australia by code sharing. We don't have any plans to fly there with our own equipment".

Oman Air's long-range fleet comprises four Airbus A330-200 aircraft and two A330-300 aircraft, shows Flightglobal's ACAS database. While the A330s do not have sufficient range to serve Australia non-stop, the carrier has six Boeing 787-8 Dreamliners on order for delivery no earlier than 2014.

In April the Omani and Australian governments signed a memorandum of understanding permitting Omani carriers to operate up to four direct flights a week to Sydney, Melbourne, Perth, and Brisbane with additional frequencies for services that stopover or end at regional airports. Australian carriers were permitted four weekly flights from the same four cities to Oman, and additional frequencies for services operating or originating from a regional airport. The MoU included codesharing arrangements.

Oman Air's far east network also includes eight weekly services to Thailand's Bangkok, schedules in Innovata show.

In Qantas's statement on the ACCC granting interim approval for the carrier's joint business agreement with American Airlines (so much for taking a close look) is a poke at the Virgin Australia-Singapore Airlines alliance announced this week.

In that deal Virgin Australia chief executive John Borghetti highlighted the significance of gaining access to China and India: "If we look at the link between China, Australia and the mining industry, it makes a lot of sense. China is deeply involved in the Australian mining industry, and many mining companies have their offices in Singapore. Flying to China or India yourself is always going to be difficult, but this gives us a great link."

The Qantas statement, below, specifically mentions the carrier's partnership with China Eastern, but strangely not Cathay Pacific, who expects to rely heavily on Chinese traffic--a further sign of weak relations between Cathay and Qantas? Indian carrier Kingfisher Airlines also receives a mention.

Membership of the oneworld alliance gives Qantas customers access to a group of world-class airlines in all regions of the world. This week we announced that Malaysia Airlines will join oneworld in 2012, increasing its reach in Asia, and following India's Kingfisher Airlines and Germany's Air Berlin.

During 2010 we also added a number of new destinations to our codeshare partnership with China Eastern. These partnerships increase choice and convenience for customers, and alliances will remain a key focus for Qantas in coming months.

American Airlines says its suboptimal long-haul fleet and pilot contract restrictions prohibit it flying to Australia.

The oneworld partner discussed its network strategy in its application to the US Department of Transportation for approval of a joint business agreement with Qantas.

AA says the six Boeing 777-300ER aircraft it has on order (thrice the number it had on the books in January) "are not yet committed to particular routes" but "given that American is currently short on long range aircraft to serve its existing routes, American will be carefully considering where these assets will be deployed and how they will be configured".

Furthermore, AA says:

the terms of American's current collective bargaining agreement with the Allied Pilots Association would not permit service to Australia/New Zealand. That agreement contains a 14:30 flight time limitation. According to block times published by Qantas, service from Sydney to Los Angeles has an elapsed time of 14:35 to 15:00 depending on equipment type flown. Service from Sydney to Dallas/Fort Worth has an elapsed time of 15:25.

But as colleague Dan Webb points out on Things in Sky, AA can request exemptions from its pilots union as their agreement "contains language governing extended long-haul flying...on a city pair-specific basis only, which means airline management must secure an agreement with APA".

AA secured such an exemption for its Dallas-Beijing proposal (which did not materialize), and furthermore, as Dan points out, AA's Chicago-Delhi route has a block time of 14 hours and 40 minutes, five minutes longer than the 14:35 Qantas block time cited.

Regulators say permission to coordinate business, be it this proposed JBA or other anti-trust immunity cases, should be granted to carriers who show a commitment to the respective market and will bring public benefit. While there may be some benefit, is AA really showing its best commitment by saying new, range-opening aircraft are better used elsewhere and failing to disclose the full extent of its agreement with pilots?

The carriers are trying to brush off the notion of AA not serving Australia, but it is a significant matter and needs close scrutinizing by the DOT and ACCC.

Qantas and AA previously applied to the ACCC in an application that made it explicitly clear, but did not explain why, American Airlines would not enter the trans-Pacific route--sometimes saying so twice on one page. The application concluded the two "are not true competitors on the these routes and there can be no detriment to competition resulting from the implementation of the Proposed JBA."

Approval for the JBA, which targets schedule and fare coordination, would grant AA not just advantages of codesharing but also many of the benefits of serving the route without actually flying it. That seems to give AA no reason to enter the market, which invalidates their "no detriment" argument about the JBA.

The prospect a few years ago of a motley of airlines including Air New Zealand, Delta, Etihad, Singapore Airlines, and Virgin Blue working together would have seemed odd if not farfetched, but we now understand it to be an enemy's enemies working against it. Or as Air New Zealand general manage Australia Cam Wallace told sister publication Travel Today: there is "a pool of airlines working in a cooperative manner to create a powerful competitor to Qantas".

Singapore Airlines joined that pool today when the carrier and Virgin Australia announced at the IATA AGM their intention to form an alliance that will allow the carriers to coordinate schedules between Singapore and Australia and beyond (expect next February's Brisbane-Abu Dhabi route to be served on an A330 and routed through Singapore, as Etihad currently does). The two will also codeshare on each other's international and domestic flights but not V Australia's trans-Pacific services. Reciprocal frequent flyer programme benefits and lounge access, engagement in joint sales, marketing and distribution activities are also planned.

The partnership has large implications for the corporate market balance. By combining a new business-oriented premium domestic class with a venerable international partner with a wide reach, Virgin Australia creates a viable alternative to companies who currently use Qantas for all travel. That is critical as Virgin Australia looks to double its corporate market share to 20% as it chases higher yields.

But Singapore Airlines benefits too. Virgin Australia will put on Singapore Airlines flights its corporate, and thus high-yield, passengers wooed from Qantas. This will enlarge Singapore's already sizable corporate base.

Singapore Airlines has a far larger network in Asia than Qantas--although not non-stop from Australia (but expect Virgin Australia to serve key Asian cities with its A330s)--and Virgin Australia's lower cost base will enable it to offer a premium seat for less than what Qantas charges, a selling point for companies looking to reduce cost.

Partnering with Singapore Airlines would fill the Asian void in Virgin Australia's network and give it access to every major market from Australia, creating a virtual network in the continent that will see the largest air growth anywhere in the world over the coming years. As Virgin Australia chief executive John Borghetti told us in Singapore, the deal is especially important for access to, and to grow market share to, China and India:

"If we look at the link between China, Australia and the mining industry, it makes a lot of sense. China is deeply involved in the Australian mining industry, and many mining companies have their offices in Singapore. Flying to China or India yourself is always going to be difficult, but this gives us a great link."

This hugely beneficial deal had been in the works for some time and goes hand in hand with Virgin Blue's transformation to Virgin Australia. It is understood Borghetti early on favoured an alliance with Singapore Airlines as well as the rights to use the "Virgin" name internationally. But Singapore Airlines, sources say, was hesitant to be directly associated with a low-cost and rambunctious, if you will, carrier.

Although that seems ironic now that Singapore Air will start a low-cost carrier, Singapore made that move under its new chief executive Goh Choon Phong, who took up the post on 1 January this year and made the LCC his first major strategic move. Last year Borghetti would have been in discussions with then-CEO Chew Choon Seng.

Borghetti wiped Singapore's concerns away with his plan to move Virgin upscale and introduce a business class: a low-service carrier no more. That led, sources say, to Singapore granting Virgin the right to use "Virgin Australia" across its entire network, which Virgin will do so by the end of the year, and also included a mutual understanding for the two to develop their relationship.

The partnership announcement's press release has a telling quote attributed to Borghetti, who says his carrier and Singapore are suited to be partners "with the recent re-positioning of our brand and the launch of our product enhancements, including domestic business class."

The crux of Qantas and AA's joint business agreement (JBA) application is if the two carriers should be granted greater leveraging power by being able to coordinate prices and capacity. Everything else in the application, which the carriers are eager to talk up, can be done without approval, and even without approval Qantas and AA could reduce fares by doing more labour-intensive work, such as making more inventory buckets available, and offer greater flight options by researching connecting services and adjusting appropriately.

The Qantas-AA application ironically pleads for approval as "the proposed Virgin/Delta joint venture is likely to further reduce their market share as Virgin and Delta have indicated that their joint venture supports the introduction of further new Trans-Pacific services."

Qantas and AA are concerned about Virgin and Delta and so are requesting approval for greater coordination to combat Virgin and Delta, who two years ago were concerned about Qantas and AA and so requested approval for greater coordination to combat Qantas and AA. Is the current balance between the trans-Pacific operators fair or skewed?

The application states AA has no intention of deploying its metal on the trans-Pacific route, sometimes saying so twice on one page. With AA not serving the trans-Pacific route, the application argues that Qantas and AA "are not true competitors on the these routes and there can be no detriment to competition resulting from the implementation of the Proposed JBA."

But therein lies the competitive problem: JBA approval would give AA no incentive to enter the trans-Pacific market. In other alliances that required regulatory approval--oneworld and Star across both the Pacific and Atlantic, British Airways and Qantas between Australia and the UK--all parties involved flew the route.

Will the limited Qantas-AA application, comprising one applicant who flies the trans-Pacific route and one who does not, give the pair an unfair advantage over the more comprehensive agreement between Delta and Virgin, both of whom fly the route?

Although passengers will see gains if Qantas receives approval of of its joint business agreement (JBA) to "reinvigorate" its partnership with American Airlines, the main beneficiary will be Qantas investors and stakeholders because the application shows that Qantas is finally doing something.

(See related post: should the JBA be approved?)

From the four years since Virgin Blue announced interest in Boeing 777 aircraft and the two years since V Australia entered the trans-Pacific market, Qantas did nothing strategic to combat competition until it announced this January it would move its San Francisco flight to Dallas, a service that began Monday and offers more connectivity with AA than out of Los Angeles or San Francisco.

Not only was Qantas riding its coattails, V Australia was becoming aggressive, striking an alliance with Delta a mere five months into the former's operation. Although the joint-venture was only finally approved last week, there should have been no doubt the two would be a reckoning force. Even without anti-trust immunity, Delta and V could codeshare and establish reciprocal frequent flyer and lounge benefits, three critical parts to grow business.

Now Qantas is placating investors and stakeholders by telling them it is! doing something. In fact, it's doing somethings. But they are not impressive. The list of benefits arising from the renewed partnership reads like a list of everything Qantas could have been doing for years--without approval--but did not bother since it had a duopoly on trans-Pacific services.

Let's break down the seven "benefits" listed in the carriers' application to the Australian Competition and Consumer Commission.

1. FREQUENT FLYER PROGRAMMES
What Qantas says about proposed benefit under JBA:

Equivalent privileges for one airline's frequent flyers when travelling on the other airline (including points bonuses, cabin upgrade offers and onboard loyalty status recognition).

What Qantas does not say:
oneworld is woeful at earning miles on non-premium tickets. Some of the cheapest Qantas tickets earn zero miles on American Airlines while others earn a measly 50%, although that was not as bad as the 25% AA gave for British Airways flights prior to their trans-Atlantic joint venture. Post JV approval, AA bumped that up to 100%. If AA and Qantas wanted to, they could today give their members 100% mileage earning on revenue tickets.

Members already earn elite bonuses but cannot access upgrades using miles. As for the impressive-sounding onboard loyalty recognition, does that entail a basic PA like Virgin Australia's where it gives a special shout-out to Etihad members?

2. AAVACATIONS (TOURISM PROMOTION)
What Qantas says about the current situation:

AAVacations does not promote Australia as a holiday destination.

What Qantas says about proposed benefit under JBA:

The Proposed JBA will facilitate improved tourism to Australia through new services and the active promotion of Australia as a holiday destination by AAVacations.

What Qantas does not say:
Complacency, not regulatory approval, is the problem here. With trans-Pacific flights often full and ticket prices high with little marketing effort (prior to the duopoly ending), there was little incentive for American Airlines' tour operator arm, AAVacations, to put package deals together for Americans. If flights to Australia exist--under a JBA or no JBA--a potential market exists.

3 & 4. MARKETING AND THE CORPORATE SECTOR
What Qantas says about the current situation:

a) No or limited joint marketing. b) Limited opportunity for joint corporate dealing.

What Qantas says about proposed benefit under JBA:

a) Co-branded marketing initiatives will better utilise the respective home market sales and distribution networks of each carrier and avoid duplication. b) Will work together to simplify corporate fare offers, maximise discounts and streamline the procurement process for corporate customers and be in a position to better meet the demands of corporate customers for alliance based deals.

What Qantas does not say:
When Qantas and AA were in their heyday, they had it good. Qantas was the only reputable trans-Pacific operator and had the domestic network while AA was the largest airline in the US and the world. There was no threat from United having a larger domestic market with its Continental merger, and no threat from Delta entering the market with its large network courtesy of its merger with Northwest. Although Qantas has recently felt pressure from Virgin on the domestic corporate market, the pressure was there since V Australia's launch two years ago. What took so long?

5. INCOMPLETE FARE BOOKING INVENTORY
What Qantas says about the current situation:

AA does not have access to tactical sale fare classes and Qantas has limited access to discount economy inventory on AA for add-ons and groups.

Qantas says the JBA will:

optimise the number of discounted seats available through the booking life of a flight as well as the strategic release of discounted inventory to drive volume on poor performing routes.

What Qantas does not say:
Qantas and AA already practice this on flights to the US via Toyko. AA's Australian division coordinates with Qantas for a fare comprising a Qantas flight to Tokyo and AA flight to the US that is significantly cheaper than if booking two tickets. Limited inventory access is an airline, not regulatory, problem. This is only a problem now because increased competition means Qantas and AA need to match, where possible, competitors' fares and give up the high yields they used to enjoy under limited competition.

6. COORDINATE PRICES (requires regulatory approval)
Qantas says the JBA will:

facilitate lower fares, additional discounts to the majority of the most visited United States destinations, new fare products including 'Walkabout fares', preferential availability and enhanced responsiveness to market conditions.

What Qantas does not say:
Like the incomplete fare booking inventory, the need to offer lower fares only arises through competition (but competition that is well established by now). While Qantas is eager to toot the JBA offering discounts of $700, that reduction is only to five smaller cities. Fares to larger cities like New York, Boston, and Washington see discounts of only $50 or less.

The "Walkabout Pass", in which tourists travelling to North America from Australia and New Zealand pay a set fee for regional North American flights is a no-brainer. Indeed, it is very similar to oneworld's Visit North America pass but Qantas is promising the pass will be integrated with trans-Pacific flights and reduce taxes, another enhanced offering that arises out of competition. A similar pass will be offered to non-Australian tourists for domestic Australian flights.

7. COORDINATE CAPACITY (requires regulatory approval)
What Qantas says about proposed benefit under JBA:

Detailed sharing of market information will lead to improved demand forecasting, prompt identification of market opportunities and enhanced ability to cater for growth through the addition of routes and frequencies.

What Qantas does not say:
Qantas says initial responses to its Dallas flights show connecting flights to Vancouver, Calgary, and Toronto are popular, even with their lengthy layovers. But AA can easily gleam that by seeing where its connecting passengers are coming from and how many they number.

WHO BENEFITS?
These benefits, if approved, will be good for passengers. (See related post if the JBA should be approved.) But I have no doubt Qantas will succeed in confusing the majority of investors and stakeholders of its delinquency for proactivity. It remains to be seen if this new deal is too little, too late for Qantas' once firm hold of the trans-Pacific market.

But that future, even if in the medium/long-term, will see not just over 100 Emirates flights but changes from Virgin Australia, the Qantas Group, and Air New Zealand.

Virgin Australia is well on its way to holding Etihad's hand and then sprinting to catch up to Emirates while the Qantas Group is still finding its lane on the running track. Air NZ, meanwhile, seems content focusing on its key market of London traffic while opening select new routes.

Key changes to the proposed anti-trust alliance between Delta and Virgin Blue (now Australia) convinced the US Department of Transportation to overnight tentatively approve the alliance for five years, saying the two carriers "have made every effort to achieve efficiency-enhancing integration at the outset". 

V Australia and Delta have submitted to US Department of Transportation details of their capacity commitment on the trans-Pacific market. The two carriers had previously announced their intention not to cut flights in an effort to quell DOT concerns their pending joint-venture would not be anti-consumer.

Under their commitment, V Australia and Delta would maintain at least a "historic level of Transpacific service" service for two years following JV approval. They define that as seven weekly return flights in the peak season for Delta and six weekly flights in the off-peak season. For V Australia, the historic level equates to 14 weekly return flights during the peak season and 11 weekly flights in the off-peak season.

Importantly, the carriers propose those flights be from any point in the US to any point in Australia. This would pave the way for Delta or, more likely, V Australia in the short-term to operate to a US destination besides Los Angeles and even outside of California, which the carriers flagged in their initial application. As V Australia is restrained with no further announced aircraft deliveries that could open new routes, the market could see V Australia change its route network after JV approval by cutting LAX services in favour of another US point.

Of course, there are caveats. The carriers are at their own discretion to determine the periods (note the plural) of peak season, although they affirm they will maintain a peak schedule for at least six months every year.

That means V Australia will have to operate a minimum of 1260 one-way trans-Pacific flights, and 656 for Delta. Delta proposes it to be permitted 10 round-trip cancellations a year, and V Australia proposes 20 round-trip cancellations for itself.

Finally, the carriers say their agreement "is not intended to apply in the case of external events beyond the Parties' control that materially affect the demand for or cost of providing transpacific air service". That includes WTI oil not exceeding US$120/barrel (at present it's $10 shy of that threshold); economic crisis causing the US Dow Jones Industrial Average to drop below 9,000 points or the Australian stock market to dip below 4,000; AUD:USD exchange rate dropping below 1:0.80; or a "terrorist attack, natural disaster, pandemic illness or other significant external event"

It was curious to read a press release extolling how V Australia has topped Roy Morgan Research's latest Airline Satisfaction Report. The survey found V Australia passengers are 91% "very" or "fairly" satisfied, which is ahead of stalwarts like Singapore Airlines, Emirates, Cathay Pacific, and, yes, Qantas.

One must assume those are V Australia passengers and not Etihad passengers codesharing on V Australia. The latter, it is understood, are not pleased to find themselves on V Australia.

To V Australia and management's credit, it has had an Etihad flight attendant accompany V Australia flights to and from Abu Dhabi while the flight and partnership kicks off. But the product differences between Etihad and V Australia are causing headaches.

First, there is no first. V Australia does not offer first class, forcing Etihad first class passengers into V Australia's business class that, unlike Etihad business, has a seat in the middle. Etihad's staggered seating in business offers more privacy than V Australia's seats in a row. Indeed, V Australia's seats are remnants of the previous management that wanted an economical business class.

Then there are the lack of perks. For customers in the pointy end, V Australia has no offers limo transfer service only for full-fare business passengers, unlike Etihad. In the back of the cabin in economy, V Australia does not offer in-seat power, unlike Etihad.

It is inevitable V Australia's premium cabin will have to be upgraded to align itself better with Etihad, Asian partners, and future partners beyond Delta. (Ironically, Delta features the Virgin Atlantic-like business class suite V Australia wanted but did not purchase for its 777s due to Virgin Atlantic suing the manufacturer, Contour, over allegedly breaking the patent and selling a knock-off version to airlines including Delta.)

Having secured a strong customer base and now being profitable, it seems logical for V Australia to be able to upgrade its product and increase fares and yields in the process.

The question for V Australia is when aircraft can be taken out of their tight schedule and when, amidst change programmes and the carrier already tightening up on spending, there will be capital to make such investments.

Update - comment from V Australia:
V Australia does offer a complimentary limousine service to eligible International Business Guests, including all Etihad codeshare Guests. To request their limousine transfers Etihad codeshare Guests can call Etihad, or they can call our V Australia Guest Contact Centre directly (Australia: 13 82 87; UAE: 8000 170 050; UK: 0843 104 7777; Other International: +61 7 3333 6888). More information can be found on our website at http://www.vaustralia.com.au/in-flight-services/international-business/limo-serv ice/index.htm