USA blocks Qan­tas/amer­i­can Air­lines ex­panded al­liance

Travel Bulletin - - STATE OF THE INDUSTRY -

Qan­tas ’ vi­sion to ramp up an al­liance with Amer­i­can Air­lines is fac­ing a road­block af­ter the US Depart­ment of Trans­porta­tion (DOT) flagged con­cerns the joint ven­ture would harm com­pe­ti­tion on flights be­tween the United States and Aus­tralia. As trav­el­bul­letin goes to print, Qan­tas and AA were busy pre­par­ing a re­sponse to the DOT’S ten­ta­tive de­ci­sion to deny the ex­panded joint busi­ness and an­titrust im­mu­nity (ATI) re­quested af­ter it said the tighter-knit part­ner­ship was “likely to in­crease the al­ready pro­nounced market con­cen­tra­tion” with the com­bi­na­tion hav­ing a 60%-plus market share. “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, not­ing it had found the Us-aus­tralia market was about 16% more ex­pen­sive than other in­ter­na­tional mar­kets of sim­i­lar dis­tance and market den­sity for US point-of-sale pas­sen­gers. It also said Qan­tas com­mands a rev­enue premium over its ri­vals, charg­ing an aver­age of US$1,271 on main­land USA to Aus­tralia flights, com­pared to that of United (US$1,087), Delta (US$862) and Vir­gin Aus­tralia (US$824). “We ten­ta­tively find that the pro­posed al­liance would sub­stan­tially re­duce or elim­i­nate com­pe­ti­tion at the net­work, coun­try-pair, and city-pair lev­els,” the US trans­port watch­dog con­cluded.

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