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American Air, Qantas Renew Push For Trans-Pacific Venture

Published on Mar 1 2018 12:23 PM in General Industry tagged: Trending Posts / American Airlines Group / Qantas Airways Ltd.

American Air, Qantas Renew Push For Trans-Pacific Venture

American Airlines Group Inc. and Australia’s Qantas Airways Ltd. aren’t taking no for an answer in their bid to deepen ties on flights across the Pacific.

The carriers are asking US regulators a second time for permission to coordinate fares and schedules, revamping an earlier request in response to concerns that the combination would hurt competition. American and Qantas bolstered their case with details of a study finding that such joint ventures benefit consumers and produce lower average fares on connecting service.

The airlines, which are longtime marketing partners, are looking to improve profit by sharing costs and revenue on joint-venture flights as though they were a single entity. They withdrew an earlier request for antitrust immunity in November 2016, after the US Transportation Department said the carriers should provide more evidence of potential benefits and declined to give them more time to respond to a tentative denial.

The tie-up “will generate significant consumer benefits not achievable through other means and does not result in any lessening of competition,” American said in a filing Monday with the Transportation Department.

Without a venture that would be immune from antitrust restrictions, the airlines “will have no choice but to further reduce codesharing on their networks,” American said in a statement. “This will jeopardize the number of services and routes each carrier flies between the US and Australia and New Zealand.”

In a separate statement, Qantas said it might have to cancel its Sydney-Dallas service if the venture with American isn’t approved, because the route -- one of the world’s longest -- relies on codesharing with the US airline to be economically viable.

Evaluating Impact

In the latest proposal, American said the deal would provide a $310 million annual benefit to consumers, including $89 million from lower fares, and $221 million from better connections and improved route offerings. The joint venture would generate as many as 180,000 new passenger trips between the three countries each year and enable the airlines to begin routes to new city pairs not now served by either carrier, American said.

US regulators in 2016 concluded that American and Qantas would control as much as 60% of nonstop capacity between the U.S. and Australia. An immunized venture would “substantially” reduce or eliminate competition on several levels and create an opportunity for American and Qantas to exclude future rivals from the market, the government said.

Approval of the same joint business proposal by authorities in Australia and New Zealand remains in place.

News by Bloomberg, edited by Hospitality Ireland

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