American, Qantas Plan To Resubmit Joint Venture Agreement

January 29, 2017
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PHOTO: American Airlines hopes a change in government administrations will be kinder to its plans to expand with Qantas Airways.

(Courtesy Flickr/Oliver Holzbauer)

American Airlines and Australian national carrier Qantas Airways, whose application for an expansion of its joint venture agreement was denied in November, plan to resubmit their agreement to the Dept. of Transportation in the hopes of a more favorable ruling from the Trump Administration.

Qantas CEO Alan Joyce hinted at such a move in an interview with Reuters on Thursday, but American confirmed it on Friday during its earnings conference call with analysts and reporters.

“We’re excited to get this refiled,” American chief marketing officer Andrew Nocella said. “We think there are a lot of consumer benefits, and we’re anxious to make our case and get a fair review going for us.”

The initial application would have allowed American and Qantas to coordinate everything from schedules to airfares among routes in the U.S., Australia and New Zealand. According to Reuters, the previous inability to coordinate pricing meant that American Airlines flights between Australia and the U.S. were being sold at lower fares than Qantas flights, putting a bigger burden on the Australian airline. The new alliance, under terms of the application, would have the largest share of seats between 200 pairs of cities, and account for nearly 60 percent of all seats between the United States and Australia.

And that’s why the DOT, under the Obama Administration at the time, said no.

Buoyed by concerns expressed by JetBlue Airways and Hawaiian Airlines, the DOT felt the American-Qantas venture would create a monopoly on the routes.

Now the two carriers will try their hand with new DOT Secretary Elaine Chao and the Trump Administration.

“What we need to do is work out the implications, which we are still working through and then talk about what we will do and review our options with the Trump administration,” Joyce told Reuters.



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