Major airline news: Qantas and American to form joint business

Qantas and American Airlines have filed an application for a second time seeking approval to form a joint business.

The airlines first submitted approval in 2016 which was struck down by US regulators who were concerned the joint business would make up 60 per cent of the aviation industry in Australia and the US.

It is not clear how the new application differs from the first, however, it cites a multitude of reasons why the partnership will be beneficial to consumers.

The second application was submitted to the US Department of Transportation (DOT) this morning.

According to Qantas, the 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”.

These include; up to $USD 221m in value from expanding codesharing between American and Qantas, as well as up to $USD 89m in value by offering a wider range of fare classes across each other’s networks, including lower fares and discounts.

As per the release, it 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”.

Overall, Qantas highlights the improved customer experience which an “expanded relationship” would create.

According to the airline, a joint business would mean improved frequent flyer benefits and investments in lounges, baggage systems and other infrastructure designed to better serve the carriers’ joint customers.

It would also stimulate significant demand for new travel – generating up to 180,000 new trips between the US and Australia and New Zealand every year.

While it seems the airlines are remaining positive about the application, Qantas has said that if it 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.”

It gives the example of Qantas being 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.

In 2016, when the first application was denied, Qantas said the DOT decision represented a “significant departure from precedent and ignores the evidence of intense competition on the trans-Pacific as well as the material benefits that this alliance already provided and would continue to provide to consumers”.

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