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  • US gives tentative nod to American-Qantas joint venture

US gives tentative nod to American-Qantas joint venture

The US Department of Transportation (DOT) has tentatively approved a joint venture (JV) between American Airlines and Qantas Airways.

The move remains subject to a several-week objection period, but, if finalised, will enable the carriers to coordinate flights between the USA and both Australia and New Zealand.

The tentative approval marks a step toward formation of a third JV in that market. The other established JVs include deals between Delta Air Lines and Virgin Australia, and between United Airlines and Air New Zealand.

"If granted final approval, the carriers will coordinate their planning, pricing, sales and frequent flyer activities to offer customers a single proposition on transpacific flights, with new options and customer service enhancements," says the DOT in a media release.

The tentative approval would require American and Qantas to complete a self-assessment of their operation after six-and-a-half years to determine if projected market benefits materialise, according to regulatory documents.

The DOT will review the assessment, which will focus on metrics such as capacity, technology investment and passengers carried. The carriers would also need to file annual reports.

Additionally, the DOT's order includes measures to ensure the JV does not preclude other carriers from adding competing service between the US and both Australia and New Zealand.

Toward that end, the DOT's approval would require American and Qantas to offer feeder flights to new entrants at the same terms they offer to existing partners.

The agency tentatively approved the JV based on American and Qantas's "intent to substantially increase capacity and offer other competitive and public benefits to consumers", the order says. "There is extensive evidence in the record showing the joint applicants are likely to bring these plans to fruition."

The airlines say that via the JV they will add year-round flights between the regions and intend to announce as many as three new routes within two years.

Those new flights and additional codesharing will enable them to carry any additional 180,000 passengers annually, they say in regulatory documents.

American and Qantas first submitted their proposal in 2015, but withdrew that request after the DOT tentatively denied it based on competitive factors.

In February 2018 the airlines filed a new proposal saying they said would go further to increase capacity, reduce travel times and improve competition, the DOT notes.

The DOT will accept objections to its tentative finding for 14 days, followed by another seven-day reply period, after which the agency will more toward finalising the order.

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