American & Qantas Joint Venture Receives Final Approval

Filed Under: American, Qantas

In early June American and Qantas received conditional approval for their transpacific joint venture, which they’ve been trying to get for years. On Friday the two airlines received final approval from the US Department of Transportation for this. Let’s take a closer look at what this means.

What is a joint venture?

A joint venture is the highest level of cooperation you can have between two airlines.

When airlines form a joint venture they coordinate pricing and schedules in a given market, and have a revenue sharing agreement. Exactly how that revenue sharing agreement works depends on the specific situation, but the idea is that two airlines are essentially acting as one under a joint venture.

Note that typically airlines form joint ventures between specific regions, which is why this is different than an outright merger. For example, American has a transatlantic joint venture with British Airways, Finnair, and Iberia, while they also have a transpacific joint venture with Japan Airlines.

From the perspective of a consumer, a joint venture is both good and bad:

  • The good news is that typically it gives you the most flight options in terms of schedules, since the airlines are operating as one; airlines also often try to make the experience as consistent across brands as possible
  • The downside is that it’s like a competitor being eliminated in the market, so it could lead to higher fares as it reduces competition

The history of the American & Qantas joint venture

It has been quite a rocky road for American and Qantas to get to this point:

  • In early 2016 American & Qantas filed for a joint venture, though it was blocked under the Obama administration
  • In early 2017 American & Qantas scaled back their partnership; they were basically taking away benefits so that they could later show the DOT the benefits they’d be able to add if the joint venture were approved
  • A few weeks later American & Qantas filed for a joint venture again, hoping that the Trump administration would be more likely to approve it
  • After the application had been sitting for a while without approval, American & Qantas withdrew the application
  • Then in early 2019 American & Qantas filed for the joint venture yet again
  • Then in June 2019 American & Qantas received conditional approval for their joint venture, though there’s always still a chance it falls apart

Qantas’ 787 business class

American & Qantas joint venture finalized

Yesterday the American & Qantas joint venture has been formally approved. While the DOT issued their tentative approval in early June, there’s always a period where the public can comment, which is why the approval wasn’t instant.

The DOT made this decision because they claimed it will protect competition and promote public benefits, including additional flights and increased seat availability. The DOT is making American and Qantas report annually on the progress of their cooperation, so they can determine if the partnership is in the public’s interest.

American’s 787-9 business class

What could change with this joint venture?

Now that the joint venture is finalized, I imagine we’ll see a few changes:

  • Improved mileage earning between American AAdvantage & Qantas Frequent Flyer (again, they cut mileage earning when the previous application was denied)
  • Currently American’s Los Angeles to Sydney flight is operated by a 787-9, though I imagine we could see a capacity upgrade to a 777-300ER
  • Currently American’s Los Angeles to Auckland route is seasonal, so I imagine we could see this go year-round again
  • We will also see additional routes added

New American & Qantas routes

American and Qantas have said that they’ll launch at least three new routes because of joint venture approval:

  • Qantas will launch 4x weekly flights between Brisbane and Chicago as of April 2020
  • Qantas will launch 3x weekly flights between Brisbane and San Francisco as of April 2020

Qantas said that they’d wait until final approval from the DOT before putting these flights on sale, so we can now expect that these new flights will go on sale soon.

I would note that Qantas is being sneaky here, as the Brisbane to San Francisco route doesn’t actually translate to a capacity increase. They’re simply shifting a 3x weekly Brisbane to Los Angeles frequency to San Francisco instead, which means they’re not adding any actual capacity to the US.

I’ll be curious to see what other route is added to the US, as presumably American will be adding some service as well. Could we see American launch a route to Australia out of Dallas, or could we see American take over another transpacific route from Qantas out of Los Angeles?

Could we see a Qantas 787 flight from Sydney to Chicago?

Bottom line

I know American and Qantas must be excited about this, given that they’ve been working towards this for years. While I’m generally not in favor of more joint ventures due to the impacts they generally have on pricing, I am hoping that this joint venture leads to some new routes and capacity increases.

The new Brisbane to Chicago route should be cool, though I’m not impressed that one of the first two “new” routes is just shifting of capacity from LAX to SFO, rather than additional capacity.

I guess we should now expect these new routes to go on sale shortly, since they said they were waiting on final approval.

What do you make of the American & Qantas joint venture being approved?

Comments
  1. “Protect competition”. You Americans are funny sometimes. Garuda and a number of other airlines were recently slapped with fines by the Australian authorities for price fixing (even though the airline argued it was fair game). It’s them you gotta watch out for. Hopefully the Aussies will have more interest in protecting passengers over airlines

  2. Given the beating traditional carriers are taking from budget competition, it makes sense that American and Qantas would want to cooperate on their few remaining long haul routes with no budget competition and raise fares.

  3. Expected outcome given the current administration: stupid and evil in all things.

    In what universe is this good for customers? Joint ventures are bullshit regardless of how you spin it. I hope the Aussie government doesn’t suffer from complete regulatory capture; perhaps they’ll have the stones to quash this.

  4. Qantas I can only read as Quant Ass. A bunch of dunk aussies getting a better deal on a US flight. Sorry, nobody cares.

  5. Any chance we could see additional business class award availability to/from Australia by both companies?

  6. Qantas members will have a deep and abiding cynicism about just how they might benefit from such an arrangement. For example, under the current arrangement, it is virtually impossible to find a redemption ticket on AA using QF points….on ANY route other than domestic US, at least in premium cabins. Qantas pushes BA seats, with the high taxes and fees, seriously disadvantaging customers.
    Qantas has not done one consumer friendly thing in its hundred year history. It would be naive in the extreme to presume it will do so now.

  7. As a Chicago based AA MM I look forward to having more
    Flights west to GO East from O’Hairy…
    Nonstop would fly over some interesting points, the Olde fashioned way of stoppong along the way Tahiti’ was pleasant arriving early morning welcomes by sweet smells
    And lovely people…
    Then venturing on to Christchurch and on to Sydney….
    What ever happened to travel for its own sake…..

  8. Qantas and American filed for ati this time in February 2028, early 2018, not early 2019, as incorrectly stated I. This piece.

  9. @Brian said: Any chance we could see additional business class award availability to/from Australia by both companies?

    Good luck. Dream on.

  10. @Chris – were you dunk when you wrote that?
    @Andrew – the JV has already been approved by the Australian Competition and Consumer Commission – no need for further approvals from this end.
    It’s worth noting that NZ/UA and VA/DL already have TPAC JVs.

  11. It’s time to allow Singapore Airlines to fly between the US and Australia, like they wanted.

  12. As a (mostly) US-based QFF member, I’m looking forward to greater points and SC-earn from AA flights. The downside – it means having to fly AA.

  13. Hi Ben
    Thanks for the article and news update.
    I thought this might be a good thing for customers for increased award availability but looking at the comments, that might not be an outcome.

    Are there any other joint ventures currrntl that we can use as a benchmark to see their outcomes?
    I’m thinking by aa and ehtihad? Or Jetblue and Emirates? Or would those not be joint ventures and just 2 airlines code sharing?

    Thanks

  14. Gotta agree with @Paolo’s sentiment. Qantas being Qantas will leverage this JV to boost their bottom line. That’s their entire focus, despite how their world-class spin machine will spin this sh*t sandwich.

  15. I apologise if I missed this in the article, but any idea if this will affect Qantas’ flights from NY? I remember in a previous post you imagine they are going to be getting rid of the NYC-LAX segment. Could this JV be part of that?

  16. How is this joint venture any different than the current OneWorld alliance arrangement?

    As a consumer, I am not sure what benefit this will bring me. What new benefit will I receive that I do not already have?
    FF miles – check
    Baggage interline agreement – check
    Lounge access – check

  17. Need you to speak on the travesty that is the prices to fly out of DFW to anywhere in the world even in low season… they claim Texas is a breeding ground for the free market, but e.g. the Wright Amendment begs to differ. Also, AA should be ashamed of its claim that expansion at DFW is to benefit the customer when in reality it will just fortify the monopoly it runs there

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