American Airlines/Qantas believe JBA will ‘substantially’ improve quality of travel to Australasia region

Earlier this month, American Airlines and Qantas made a submission to the US Department of Transportation (DoT), concerning their application for antitrust immunity (ATI) for their proposed trans Pacific joint business agreement (JBA).

The carriers expect the proposed JBA will: Generate a number of consumer benefits valued at up to USD310 million p/a, stimulating additional demand of 180,000 new passengers p/a; “Substantially” improve the quality of travel to the Australasia region; ATI refusal risks “significant loss” of connectivity, putting important routes at “significant risk” including Qantas’ Sydney-Dallas/Fort Worth service which is estimated to generate USD133 million in consumer benefits p/a.

The carriers argued revenue pooling JBAs result in connecting fares close to 8% lower than interline/codeshare fares and nearly as low as airfares for online connecting service on a single carrier. They also noted “widespread support” for the JBA, which has been approved by regulatory authorities in Australia and New Zealand.

US DoT received signatures from 1138 supporters across constituencies, including 64 US state and local officials, 17 airports, 825 travel agents, 45 business associations, 87 individual corporations and 26 other non profits, universities and organisations from 37 US States and 28 countries in the Americas and Australasia. The carriers concluded no party has identified any specific consumer harms likely to result from the JBA, with only JetBlue proposing the US DoT limit its ATI grant for three to five years with a renewal requirement thereafter.

Does the industry agree?

JetBlue Airways requested the DoT limit the period of time for which joint venture approval is granted to American Airlines and Qantas Airways, should the airlines request for antitrust immunity (ATI) be granted. JetBlue desires the DoT limit any joint venture approval to a period of three or five years with the possibility of renewal, to ensure the American and Qantas alliance continue to serve in the public interest. JetBlue said it appreciates the removal of exclusivity provisions by American and Qantas to reduce some competition concerns, and added the DoT should require other carriers applying for ATI have no exclusivity provisions. Additionally, JetBlue added it is concerned Qantas, American and Alaska Airlines may continue to add gates and frequencies at Los Angeles International Airport, and requested the DoT monitor the competitive dynamics at the airport.

In early Nov-2018, Dallas/Fort Worth International Airport, requested the DoT approve American Airlines and Qantas Airways’ application for a JBA between North America and Australia and New Zealand. Dallas noted denial of the carriers requests would harm the airport, the airport’s metroplex, the travelling public, and competition in the mainland US-Australasia market. Dallas noted without longer term cooperation between American and Qantas would be in jeopardy of failing. Additionally, the airport noted the denial of the JBA could force Qantas to suspend its Dallas-Sydney service, making the route unsustainable. If the service were to be suspended, the number of cities that could connect over Dallas/Fort Worth in the north would decrease from 91 cities to 36, while the number of cities that could connect over the airport in the south would decrease from 82 cities to 26. The airport stated American and its alliance partners are its linchpin of economic growth, adding the US-Australasia market has only expanded because of antitrust immunity.

Allied Pilots Association (APA), which represents more than 15,000 American Airlines pilots, requested the DoT grant the pending American Airlines and Qantas Airways JBA. APA president Captain Dan Carey said the JBA will “help the two airlines stimulate additional travel and compete more effectively in the South Pacific market”, noting previous JBVs between American Airlines and other carriers have been beneficial to American Airlines pilots.