American & Qantas Are Cutting Ties So They Can Strengthen Ties

In November I first wrote about how the U.S. Department of Transportation blocked the expanded transpacific joint venture of American and Qantas.

American & Qantas’ expanded cooperation was rejected

American and Qantas increased their cooperation when American added their first two routes to the South Pacific. Specifically, American launched flights from Los Angeles to both Sydney and Auckland. American and Qantas already had a joint venture, though American didn’t operate any of the flights across the Pacific.

The intent was that American and Qantas would be expanding together under their joint venture, giving passengers more transpacific options. For example, as part of this Qantas also relaunched flights between Sydney and San Francisco, instead taking some frequencies off their Los Angeles route, since American would be filling that gap.

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American 777 in Sydney

While Australian authorities had already approved the expanded joint venture, the U.S. authorities hadn’t. However, I think both airlines were rather confident it would be approved, as they launched new flights that were motivated by the joint venture.

The way the U.S. DOT saw it, the proposed alliance would substantially reduce competition and consumer choice, without producing sufficient countervailing public benefits.

While the two carriers could have tried to appeal this decision immediately, they instead decided to accept the decision and wait for the Trump administration to take office, and then refile.

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Qantas 747 in Los Angeles

American & Qantas are cutting ties so they can strengthen ties

This shouldn’t come as a surprise, but American and Qantas will soon be refiling their application with the DOT, seeking anti-trust immunity for expansion of their joint venture. Per the press release:

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

As a result, American and Qantas will be scaling back their partnership for the time being, 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

In other words, previously there was near metal-neutrality, meaning that Qantas fliers earned as many points and credits for flying on American between Sydney and Los Angeles as on Qantas. That won’t be the case anymore.

On the plus side, this partnership being reduced for the time being shouldn’t lead to American cutting their services on the Sydney flight, as they’ve offered improved service to largely match Qantas.

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American offers pajamas even in business class on flights to Sydney

Bottom line

American and Qantas are playing this pretty smart, in my opinion. They waited until there was a different administration in office before contesting the DOT’s decision, and they’re scaling back their partnership so that it seems less threatening. I would guess they’ll get approval from the DOT once they refile, though I certainly could be wrong. After all, I think most were caught off guard when they were rejected the first time around.

Comments

  1. Amazing how that joint venture never resulted in AA fixing its website to remove phantom QF award availability, two years after AA was made aware of it.

  2. I took the AA flight LAX-SYD in first class with my husband in October 2016. There were some minor issues; however, another passenger remarked that Qantas is the better choice for this route in 1st class. Returning, we took AA AUK-LAX in the dreamer liner business class. One of the worst crews I’ve ever experienced, and def the worst premium cabin crew for an international flight. Anyone looking to fly AA, don’t be like me; choose Qantas. BTW, we did use the Qantas First Class lounge at LAX…very nice. American’s lounge was being remodeled, and the employees were a joke.

  3. Parker has never been known for his cabin service nor outfitting his metal with the passengers in mind, other than packing them in.

    At the end of the day it will be just another airline he has ruined

  4. This should mean QF Frequent Flyer award costs on AA will increase. Time to book AA awards with QF points pre May 1.

  5. I flew coach from SYD to CNS on Qantas, and though the food was gross, at least they offered food for free, seat back entertainment, and most of all, EVERY Qantas associate we encountered from the moment we entered SYD until the moment we left CNS in a taxi was wonderful. My husband and I made it a point to tell the associates that they were so great, and how terrible their american counterparts are.

  6. @allcreatedequal

    How does re-filing under the new administration equal extorting?

    My take on it is that QF/AA will re-file under the new admin. since it’s expected that the new admin. would read the application much more favorably, and would more likely approve it, so I’m not sure how extortion enters the picture.

  7. @Anonymous Coward
    I’m curious, not outraged by your comment or even a little annoyed, just curious: Why would this be great if it is rejected?

    Or haven’t you thought it through that far and are just trying to lob a bomb for effect?

  8. @Christian Guttman,

    I totally agree with you on the remark for the Intl crew of AA – I had the same experience on the crew albeit on a different route but same aircraft type – twice flew it, and twice very mediocre experience.
    On all my intl routes with AA last year, crew has 90% been terribly lazy, shows no interest in working and totally ZERO customer service oriented. Only had 1-2 slightly better crew (luckily they were serving my aisle) that made the experience slightly better.
    Therefore for those that has an alternative to take a partner airliner with AA code, please do so to improve your travel experience….
    Compared to the pre-merger AA, the post merger AA has so far been dissapointing (except for a few really good domestic flights with really superb crew in First/Business).

  9. To give you an idea of how bad the service was on AA AUK-LAX on the Dreamliner, when we boarded the business class cabin, crew were sitting in the seats, and one crew member had to ask my husband what the dessert was he was serving us (it was pavlova). While some of us were tossed pj’s, others waited for well over an hour. Not to mention, during sleepy time, they were the noisiest crew ever, and many of us made repeated requests that they quite down. I’d have rather flown coach in Air New Zealand than wasted my hard earned points on that flight.

  10. @Christiaan Guttman

    It’s hard to take anyone seriously who says they’d rather fly coach on a 3-4-3 10-abreast Y configuration NZ 777 than a lie flat J seat on a 787 in 1-2-1 configuration. Crappy crew aside, the seat difference is astronomical.

  11. “In other words, previously there was near metal-neutrality, meaning that Qantas fliers earned as many points and credits for flying on American between Sydney and Los Angeles as on Qantas.”

    Not quite. While the amount of status credits remained the same, a QF FF flying a QF flight # would earn ~5,000 more points flying J than they would with an AA flight # using the QF earning points calculator.

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