Qantas-American Airlines Alliance Expansion Given Nod by ACCC
28th Nov 2015
The alliance between the Australian carrier Qantas Airways and the US-based American Airlines on routes between Australia and United States will go on for at least five more years as the two companies received a draft approval from the Australian Competition and Consumer Commission this Friday.
The ACCC explained its decision by saying that, otherwise, Qantas would be unable to resume flights to San Francisco, while American Airlines would be unlikely to operate flights to Sydney.
However, in order for the deal to be made final, all three governments ? Australia, New Zealand and United States ? must give their approval. So far, Australia and New Zealand did, but we are still waiting for the US regulators to give their (hopefully positive) opinion.
Until that happens, the two airlines cannot share revenue from their trans-Pacific partnership, which is one of the main reasons they are doing this in the first place.
Adding to that, more flights from Australia to US and back will also benefit passengers, as the greater capacity will also mean cheaper tickets for them. Right now, Qantas is offering return flights between Sydney and Los Angeles for $1000 in economy class.
If the deal is approved, Qantas already has plans for six flights per week from Sydney to San Francisco using Boeing 747 aircrafts, while American Airlines will start daily Los Angeles-Sydney flights from December with its Boeing 777-300ER planes.
Right now, Qantas holds 51.6 per cent share of capacity on Australia-mainland US routes, while American is holding a 7.2 per cent share. As for the other airlines on trans-Pacific routes, United Airlines has 17.6 per cent, Virgin Australia 16.8 and its partner Delta Air Lines 6.8 per cent.
Of course, the situation could change as Air New Zealand also wants a piece of the trans-Pacific cake, mainly on flights from Auckland to Buenos Aires and Houston, and is apparently ready to offer competitive fare prices.
Air New Zealand Chief Executive Officer Christopher Luxon had this to say on Friday:
?We are very serious in believing we can build a much bigger business in Australia. We have a great long-haul proposition for Australians. We take you from an international port to an international terminal [in Auckland], wide-body to wide-body, seamless travel.?