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American-Qantas JV Gets DOT Approval at Long Last

By Michael B. Baker / 4 June 2019 / Contact Reporter
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After nearly five years of trying, American Airlines and Qantas have received tentative approval from the U.S. Department of Transportation for a joint venture between the U.S. and Australia/New Zealand carriers.

The longtime partners first filed for the JV, which will enable revenue sharing and coordinating pricing and schedules, in 2015, but the DOT rejected the application in 2016, saying the scale of the joint business could create "a potentially uncompetitive environment." The carrier refiled in 2018, and the DOT in its recent tentative approval said, "Market conditions have evolved since 2016 to mitigate any competitive harm that an American/Qantas joint venture could cause."

For one, the DOT noted, "the market has grown substantially" since the previous application, including new service from United, Air Canada, Virgin Australia and Air New Zealand.

The tentative approval includes a requirement that both American and Qantas give an annual progress report and a more detailed assessment after seven years, including on pledges to increase service between the two regions. American and Qantas will launch "several new routes within the first two years of the proposed joint business," including two new Qantas routes—Brisbane to both Chicago and San Francisco—once the JV gets final approval, according to American. Other plans include deeper integration of frequent-flier programs, airport co-location and investing in lounges that serve joint business customers.

Both of American's chief competitors already have JVs in the region: Delta with Virgin Australia and United with Air New Zealand.

Over the next few weeks, prior to issuing its final decision, the DOT will accept commentary on the tentative decision.

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