Qantas, American Airlines ditch alliance plan

Qantas and American Airlines have ended plans to expand their alliance after a ruling by US transport authorities.

Qantas chief Alan Joyce, right, with American Airlines’ Art Torno in Sydney last year. Pic: Hollie Adams

Qantas and American Airlines have terminated plans to expand their alliance after the US Department of Transportation (DOT) rejected pleas by the carriers to overturn a tentative ban on the partnership.

The two airlines had asked the DOT for a deadline extension to respond to its preliminary decision to block the expanded partnership, but the department over the weekend rejected that appeal.

The department said the airlines’ arguments to request a deadline extension were “unpersuasive”.

In light of that rejected appeal, Qantas and American Airlines have now decided to withdraw their application for antitrust immunity.

“This is an extremely disappointing sequence of events for Qantas and American Airlines, as well as for customers, and ultimately for trade between the United States and Australia,” Qantas said.

“As anticipated in our application, there has been a strong competitive response from other airlines on the trans-Pacific, including additional capacity. Fares on the trans-Pacific have fallen since the expanded partnership was announced.”

“Qantas and American Airlines will now separately assess their positions before deciding on next steps. Both carriers are committed to finding ways to work together more closely to deliver benefits to customers that neither could offer alone.”

American Airlines said it was “very disappointed” with DOT’s decision.

“It represents a significant departure from prior DOT decisions, which have long recognised the pro-competitive benefits of combining complementary international networks.”

“Disappointed”. American Airlines.

Without antitrust approval, Qantas and American said they would be severely limited in their ability to work together to grow on the trans-Pacific routes.

“As a consequence, each airline will need to assess their trans-Pacific networks,” the airlines said.

The airlines, which already codeshare and offer frequent-flyer reciprocity with each other, had hoped to win antitrust immunity to deepen and expand the relationship into a revenue-sharing joint venture.

The expanded alliance would have allowed Qantas and American to co-ordinate schedules and sell seats on each other’s flights, enabling them to split the revenue and costs regardless of which carrier’s plane was used on a route.

US authorities, however, didn’t think the partnership would benefit consumers and said the deal could harm competition as it would allow Qantas and American to control about 60 per cent of airfares between the US and Australia.

The tentative rejection by DOT came after the Australian Competition and Consumer Commission in February granted a five-year approval for the alliance.