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Will Trump and codeshare switch swing it for Qantas?

January 30, 2017 Headline News No Comments Email Email
KLM – AMS Top Post

By abandoning a proposed codeshare, and with the blessing of Donald Trump, Qantas and American Airlines are hopeful they just might persuade the US regulatory authorities to give the go-ahead to their joint venture application.

As well as dropping the codeshare, the carriers would dump a proposed loyalty points deal.

“We’re hopeful that the Trump administration will give the Qantas joint venture application a second and more favourable look,” Steve Johnson, American’s executive vice president of corporate affairs, told the Dallas Morning News. “We look forward to doing that and having an opportunity to make our case.”

Last month, Qantas and American Airlines axed plans to expand their code-share alliance after the US Department of Transportation (DOT) refused to reconsider its objection to the closer partnership. In its ruling, DOT said there was a “high risk of competitive harm” in allowing the largest US carrier and the largest Australian carrier to enter into a joint venture.

American Airlines said it would appeal at the time but had just two weeks to do so. Although American and Qantas asked DOT for a deadline extension, the appeal was rejected. Accordingly, the airlines decided to withdraw their application for antitrust immunity. See: Qantas and American reluctantly abandon closer alliance

Now, the proposal is lurching back to life. Qantas and American Airlines have confirmed they will refile an application with the (DOT) seeking anti-trust immunity for the expansion of their joint business arrangement.

Qantas chief executive Alan Joyce admitted the new proposal would mean consumers would lose out as they would not get the same status credits as they got on American Airlines aircraft.

A statement by Qantas said the airlines had “carefully reviewed” the DOT’s November 2016 Show Cause Order proposing not to grant approval for their original application and, after considering their options, taken the decision to refile in the coming months.

“It’s both airlines’ view that the DOT’s decision didn’t take into account precedent, intense competition on trans-Pacific routes, or the benefits that a closer relationship between Qantas and American has already delivered, including two new routes,” the statement said.

“The new application will make a strong case for the full consumer, tourism and trade benefits that would come with anti-trust immunity.”

In the meantime, Qantas and American will scale back areas of cooperation that aren’t viable without immunity, including the following changes:

  • Qantas will no longer codeshare on American Airlines’ services between Sydney and Los Angeles, for new bookings made for travel from 1 February 2017.
  • Qantas will adjust its Qantas Frequent Flyer policy with American Airlines to bring it in line with other oneworld carriers from 1 May 2017. 

Important points: 

  • Passengers who have already booked a Qantas ticket to travel on American Airlines’ Sydney-Los Angeles service between 1 February and 30 September 2017 will not be impacted by these changes. From 1 October 2017, passengers with Qantas tickets on the American service will be re-accommodated on Qantas-operated flights.
  • The goal of the US Open Skies policy is to facilitate expanded international passenger and cargo flights to and from the United States and promote increased travel, trade and economic growth by eliminating government interference and providing maximum operational flexibility for airline alliances. In this context, Qantas feels the DOT’s November 2016 Show Cause Order is unprecedented.
  • Qantas does not have any free sale codeshare arrangements on overlapping sectors with any other partners, outside of similar joint business arrangements.
  • Qantas will continue to codeshare on non-overlapping routes, including American Airlines’ service between Auckland and Los Angeles and more than 130 of American Airlines’ domestic services.
  • Qantas operates more than 39 return services per week between Australia and five destinations in the United States as part of its normal trans-Pacific schedule (with an additional two flights per week between Melbourne and Los Angeles and three per week between Sydney and Vancouver on a seasonal basis).

Written by Peter Needham

KLM – Lon Footer Post

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