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American banks on consumer benefits for Qantas JV approval

American Airlines is emphasising the consumer benefits of its proposed joint venture with Qantas Airways in its latest application for antitrust immunity from the US government.

The carriers added a number of details on the benefits to consumers, including a forecast of $310 million in economic benefits plus the stimulation of as much as 180,000 new passengers in the Australia-USA market, in the application it filed with the US Department of Transportation on 26 February.

"We've gone and made the application much stronger," says Doug Parker, chairman and chief executive of American, at the US Chamber of Commerce aviation summit in Washington DC today.

He adds that American and Qantas "went back to the basics" with the application following a "surprising" rejection by the DOT in November 2016.

In addition to the economic and stimulative benefits, the airlines say they will coordinate schedules and connections beyond gateway airports, jointly invest in larger lounges, and co-locate at airports to improve the customer experience.

American and Qantas are also upping the ante on capacity, saying they will launch up to three new routes between Australia and the USA, as well as increase aircraft gauge and frequencies in existing markets, if the joint venture is approved. They promised only up to two new routes in their last application.

The carriers are mum on what new markets could be offered, though speculation in the press has centred on possible Seattle flights from Australia, or even a nonstop Sydney-New York routing.

Qantas plans to begin new service between Melbourne and San Francisco with a Boeing 787-9 in September.

Gauge and frequency increases could see American reinstate year-round service to Auckland from Los Angeles, which was dropped to seasonal status after the carriers' previous joint venture application was rejected, as well as more Airbus A380s and Boeing 777s on routes instead of 787s.

One carve-out that American and Qantas are offering to competitors is non-exclusivity in their partnership. Objections to their previous application included concerns from Hawaiian Airlines that the tie-up could bar them from connecting to Qantas and vice versa.

American and Qantas had a 49.7% share of seats in the Australia-USA market in 2017, FlightGlobal schedules data shows. This is down slightly from a 50.2% share in 2016.

Delta Air Lines and Virgin Australia, which already have a joint venture, had a 20.4% share of seats and United Airlines a 14.3% share between Australia and the USA last year, schedules show.

United has a joint venture with Air New Zealand that allows it to feed traffic into Australia over the latter's Auckland hub.

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