US DOT tentatively rejects American Airlines-Qantas Airways expansion

The US Department of Transportation (DOT) has tentatively denied American Airlines and Qantas Airways’ proposal to expand their current alliance for services between the US and Australia or New Zealand.

In this regard, the DOT has already issued a show cause order.

The department noted that it had taken into account the traffic data, passenger bookings and other submitted evidence before taking the tentative decision.

"American and Qantas will be able to compete more effectively and increase consumer benefits in the market.”

After evaluating the submitted data, the DOT found that the expanded alliance would create a potentially anti-competitive environment given the scale of the resulting joint business.

When approved, the proposed expansion will represent around 60% of seats between the US and Australian route. 

Additionally, a number of competitive options would remain for the consumers since the US-Australia/New Zealand markets are not well-served by substitute routes over third countries.

Last year, American Airlines and Qantas Airways submitted their application requesting anti-trust immunity on flights operated by them between the US, and Australia and New Zealand.

The proposal will enable the airlines to share revenue and marketing expenses on those specific routes, as well as help American Airlines to re-enter the Australasia market since 1990s.

American Airlines spokesman Matt Miller was quoted by Star-Telegram as saying: “This represents a significant departure from prior DOT decisions, which have long recognised the pro-competitive benefits of combining complementary international networks.

“Other airlines have the significant competitive advantage of antitrust immunity in the US-Australasia market.

“With the same opportunity, American and Qantas will be able to compete more effectively and increase consumer benefits in the market.”

The company is further planning to file an objection against the DOT’s tentative decision.