Qantas (QF, Sydney Kingsford Smith) and American Airlines (AA, Dallas/Fort Worth) have reapplied to the US Department of Transportation (DOT) for antitrust immunity for their enhanced transpacific joint business agreement. The initial application, lodged in 2016, was rejected by the US regulator on the grounds that the proposed metal-neutral revenue-sharing joint venture would reduce competition and consumer choice.

In their revised submission, whose scope covers routes between North America, including the US mainland, the US Caribbean territories (Puerto Rico and the US Virgin Islands), Canada, Mexico, and Australasia (limited to Australia and New Zealand), the two Oneworld carriers said the proposed joint business will significantly improve service, stimulate demand and unlock more than USD300 million annually in consumer benefits that are not achievable through any other form of cooperation.

Of this USD300 million, up to USD221 million in value will be derived from expanding codesharing between American and Qantas – opening more connections to more destinations, while a further USD89 million in value will come through the offering of a wider range of fare classes across each other’s networks, including lower fares and discounts.

The joint business will also give American and Qantas the opportunity to launch additional routes between the US and Australia and New Zealand, including new flights to city pairs currently not served by either carrier.

They argue that an expanded relationship will encourage significant improvements in overall customer experience, including more improved frequent flyer benefits and investments in lounges, baggage systems and other infrastructure designed to better serve the carriers’ joint customers.

However, should the JBA be blocked once more, Qantas and American warned they would have no choice but to further reduce codesharing across their networks. This will then jeopardise the number of services and routes each carrier flies between the US and Australia and New Zealand. Among those at risk are Qantas's 13 Australasian destinations beyond Sydney Kingsford Smith and 8 destinations beyond Auckland Int'l that American currently codeshares on. For American's part, it would eliminate codesharing on all 53 destinations from Los Angeles Int'l and all 8 destinations from San Francisco, CA while axing over half the codeshare connections from Dallas/Fort Worth (37 of 64).

As a result, Qantas may then be forced to reduce the frequency of, downgauge or potentially cancel its A380-800 services between Sydney and Dallas/Fort Worth, and American may further reduce its services between Los Angeles and Sydney and Auckland. The routes rely on codeshare support from each airline’s feeder network via their respective hub cities to be economically viable.

"The Department has immunized joint businesses of two of the three alliances operating from the United States to Australasia: United Airlines-Air New Zealand in 2001 and Delta Air Lines-Virgin Australia in 2011. The pattern is striking, and the outcome is not in doubt – just as in the US-Europe and US-Asia markets, the Proposed JBA will create a third immunized revenue-pooling joint business between the United States and Australasia and increase joint business rivalry to the benefit of consumers," they argued.