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TD breaking news – DOT proposes to deny Qantas/American Airlines antitrust immunity

US Govt says planned QF/AA alliance expansion would “harm competition”. 

Qantas’ plan to expand its alliance with oneworld partner American Airlines through antitrust immunity (ATI) has been dealt a blow after the US Department of Transportation said it proposed to disapprove the joint venture.

Under the earmarked new Joint Business Agreement, which already gained approval from the Australian competition watchdog back in Feb for a five-year term, Qantas and American sought approval to jointly plan and price services, as well as share revenue and costs between the USA and Australia/New Zealand. New routes were also planned under the joint venture.

QF/AA lodged the proposal to bolster their partnership 17 months ago, and hopeful of a green light, American Airlines launched daily services of its own on the busy Los Angeles-Sydney service last Dec.

“The Department is tentatively concluding that the proposed alliance expansion would harm competition in the US-Australian market, in particular in the large US-Australia market,” the DOT said a short time ago.

“By combining the airline with the largest share of traffic in the US-Australasia market with the largest airline in the United States, the proposed alliance would reduce competition and consumer choice,” the US regulator said.

It warned that an expanded and immunised alliance would account for nearly 60% of US-Australia seats, which along with enabling nearly 200 city-pair markets and likely deterring other new entry on the route, would lead to “a high risk of competitive harm from approving and granting antitrust immunity”.

“The existing marketing partnership between the Joint Applicants is providing American with feed and support for US-Australasian service today and could potentially continue to do so in the future without approval and grant of ATI,” the DOT said.

Currently, transpacific competitors Virgin Australia & Delta Air Lines, and Star Alliance partners United Airlines & Air New Zealand operate with ATI approval.

Qantas and American Airlines have 14 days to respond to the DOT’s proposed decision.

 

More in Monday’s issue of Travel Daily.


The above Breaking News Alert was sent to Travel Daily subscribers on 19 Nov 16

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