The joint venture between American Airlines and Qantas can finally move forward after the two airlines gained approval from the U.S. Department of Transportation (DOT) on Friday.
Tentative approval was agreed by the DOT last month granting antitrust immunity to the American and Australian carriers.
Previous U.S. Transportation Secretary Anthony Foxx said no to the joint venture
The two airlines tried to form a joint venture in 2016, but their application was turned down.
Donald Trump appointed U.S. Transportation Secretary Elaine Chao made the announcement Friday afternoon pointing out that it was the first completed review of an airline joint venture since Trump became President.
Previously, then-President Barrack Obama’s appointee Anthony Foxx rejected the joint venture covering Australia, New Zealand, and the United States after a 17-month review saying it “would reduce competition and consumer choice” according to Reuters.
The joint venture will allow Qantas and American to coordinate pricing
The new deal between Qantas and American Airlines will allow the two full-service operators to intertwine their pricing, planning and frequent flyer programs.
Between them, the two OneWorld alliance members are already planning the possibility of operating three new routes as well as increasing their capacity on the routes they already fly.
While American Airlines had nothing to say after receiving the approval, Chief Executive Doug Parker had previously said that the new partnership would create new jobs within the airlines.
Back in June, JetBlue Airways Corp let the DOT know that while they had no position on the joint venture between American Airlines and Qantas they did feel that if approved it could “substantially reduce competition in relevant markets and concentrate a huge level of market share and power in the hands of immunized alliances.” According to the Dallas Business Journal.
JetBlue went on to point out that the three big global alliances, StarAlliance, OneWorld and SkyTeam would, if the Qantas-American deal went ahead, control 86% of the U.S. and Australia market. In 2001 regulators approved similar joint ventures between Air New Zealand and United Airlines and then again in 2011 between Virgin Australia and Delta.
One of the stipulations of the approval was that the two airlines carry out a self-assessment of the impact their joint venture was having on the competition seven years after it comes into effect and report their findings to the government.
In February of last year, Qantas and American Airlines put their second attempt at a joint venture forward saying that it would allow them to coordinate fares and schedules potentially unlocking up to $310 million per year in benefits for passengers.
In their new application changes were made that included the removal of a clause that would have forbidden either airline from code sharing with another airline.
Code-sharing refers to two or more airlines, publishing and marketing the same flight under their own airline designator and flight number.
Last year Qantas said that gaining approval would allow them and American to improve their service and stimulate demand, possibly generating up to 180,000 new trips between Australia, New Zealand, and the United States.
While this is all well and good for Qantas and American, the only benefit I can see as a consumer is the new routes they are talking about. I have a dislike for joint ventures as they are only entered into to either thwart competition from low-cost carriers or improve the airline’s bottom line.
Before the joint venture, American Airlines and Qantas were competing for the same passengers. This meant that they not only had to be very competitive with their pricing but also with their customer service.
Let us know what you think about the new Qantas, American Airlines joint venture, will it be good for consumers or will we see the airfares start to creep up?