Qantas and American Airlines do not plan to make major changes to their application for antitrust immunity when they re-file soon, calculating they failed to receive clearance from the Obama Administration late last year because they fell short in explaining the benefits of their proposal, Qantas CEO Alan Joyce told Skift.
“I don’t think the regulator understood what would be the consequences of not having a partnership,” Joyce said in an interview in Los Angeles. “We think having carriers at both ends working together … can generate huge benefits to the consumer.”
The US Department of Transportation’s decision in November came as a surprise to both airlines, since Australia’s regulators already cleared the deal, which would have permitted Qantas and American to collude on fares and schedules, while sharing revenues. Delta has a similar arrangement with Virgin Australia, but the US government decided the Qantas-American deal was different, as the two carriers control a larger slice of the market. In denying the application, the DOT said the two carriers would control 60 percent of seats between the United States and Australia, creating a “potentially anticompetitive environment.”
To the airlines, the DOT’s argument missed the point. Yes, Qantas has long dominated the Australia-United States market, but American was a new entrant, only launching a flight from Los Angeles to Sydney because it expected to receive antitrust immunity with Qantas. American argued it needed its partnership with Qantas to turn what could have been a marginal route into a money-maker.
Full Content: Skift
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