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Qantas pays fine over US routes but admits no wrong

April 4, 2018 Headline News No Comments Email Email

Qantas has agreed to pay a penalty of up to USD 125,000 (AUD 162,815) after the US Department of Transportation (DOT) charged it with violating rules governing US domestic flights, relating to its New York to Los Angeles route.

Qantas has not admitted any wrongdoing. It agreed to the settlement last week to resolve the allegations, afterwards issuing a statement: “We’re disappointed by the Department of Transportation’s ruling, which we believe mischaracterizes Qantas’ codeshare arrangements with other carriers operating to and from the US as well as the cabotage rules between the two countries.”

The case involves obscure laws relating to cabotage, or the practice of a foreign-controlled airline selling tickets on purely domestic flights between city pairs in the US.

DOT’s issue with Qantas related to flights from the US to Tahiti and to New Zealand in 2015 and 2016. Some passengers began their trips at New York’s John F. Kennedy International Airport aboard the Qantas flight that heads from New York to Los Angeles, before continuing on to Australia.

Some passengers from that JFK-LAX flight apparently switched to flights operated by Qantas’ code-share partners, rather than flights operated by Qantas itself.

Specifically, DOT said passengers starting in New York could transfer in Los Angeles to Air Tahiti Nui and fly to to Tahiti. In another example, New York passengers could fly Qantas to Los Angeles before switching to American Airlines and flying on to Auckland. DOT said Qantas’ “US-facing website held out and accepted reservations and payments from passengers” for these routes.

According to an outline of the case in USA Today, DOT considered that the action by Qantas broke a federal law barring non-US airlines from transporting passengers within the US, as well as another federal law prohibiting unfair and deceptive practices.

The US Civil Aeronautics Board, which preceded DOT, ruled in 1959 that a foreign airline could legally transport within the US “only that traffic which it brings in or carries out”.

Qantas acknowledged this point, but argued that the airline business has changed in the almost 60 years since that decision was handed down. Code-shares are commonplace these days.

Under its consent deal with DOT, Qantas will stop the practices complained about and will pay USD 62,500 within one month and another USD 62,500 if it violates the agreement within a year.

Anyone wishing to read the details may do so on the DOT website here.

Written by Peter Needham

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