USA blocks Qantas/american Airlines expanded alliance

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.