US DOT blocking QF/AA JV - QF/AA resubmit

[Pleb Status]

It looks like the US DOT is going to block the proposed JV between QF and AA. As QF have already handed one SYD-LAX flight to AA, I wonder how this will now resolve itself.

I have noticed a number of bus stop ads around the Perth CBD advertising the QF/AA JV as well.

TD breaking news – DOT proposes to deny Qantas/American Airlines antitrust immunity :: Travel Daily travel industry news

 

[MEL_Traveller]

Seems like a good thing? I have become increasingly frustrated with hotel booking sites... the big companies are taking over the smaller ones and now they all share a couple of booking platforms (depending which company bought them out). This means prices are now pretty much consistent - 'bargains' aren't 'bargains' anymore. If that's the way airlines with joint ventures are going, it seems like a good thing these are blocked.

 

[anat0l]

In a more practical sense, what will denial of the alliance mean? Withdrawal of a service / some services? Less seats available? Loss of profitability potential?

 

[madrooster]

In a more practical sense, what will denial of the alliance mean? Withdrawal of a service / some services? Less seats available? Loss of profitability potential?

For a while there were QF fares that were cheaper if you booked on the QF codeshare operated by AA. This was designed to help AA fill up their service. Without approval, there's no incentive for QF to do that anymore, since profit won't be shared and so there's no incentive for QF/AA to ensure they both do well together.

 

[MEL_Traveller]

For a while there were QF fares that were cheaper if you booked on the QF codeshare operated by AA. This was designed to help AA fill up their service. Without approval, there's no incentive for QF to do that anymore, since profit won't be shared and so there's no incentive for QF/AA to ensure they both do well together.

But won't that mean AA discounts its own seats to fill up the plane? Independent of any price controls QF might want to impose? I'd rather have full competition where possible than some tie-up. That would be good for regular travellers - maybe not so much for those with status who might want the QF code-share.

 

[madrooster]

But won't that mean AA discounts its own seats to fill up the plane? Independent of any price controls QF might want to impose?

No approval = QF can't impose price controls. Although, AA has always price matched QF fares for transpacific anyway. Yes, it may mean AA has to discount their own seats but only if there is an oversupply of seats. If the market is soaking up the supply then there won't really be a need to discount at all.

 

[JohnPhelan]

They should lodge an appeal on 21 January.

 

[GoldCanyon340]

They should lodge an appeal on 21 January.

Why wait that long? 12.01pm on 20 January!

 

[anat0l]

They should lodge an appeal on 21 January.

I thought they only have 14 days to respond?

By that time, supposedly the tentative decision will be in force, so they would need to lodge a new application?

Either way, who is to say that the new administration is going to be able to make the DOT see different, and how fast will it happen anyway?

 

[MEL_Traveller]

Isn't the question whether the DOT should support the JV at all? They must have good reasons to deny it. That protects us ordinary flyers. I'm not sure I am prepared to forego cheaper fares so status holders wanting extra SCs on an QF code share can benefit.

 

[serfty]

Qantas and AA have backed out of the venture:

Qantas Airways bales out of plan to grow US traffic through American Airlines deal

... on Tuesday the airlines said they would withdraw their application for anti-trust immunity because they could not respond to the DoT's decision within the 14 days provided and were denied an extension.

"This is an extremely disappointing sequence of events for Qantas and American Airlines, as well as for customers, and ultimately for trade between the United States and Australia," a Qantas spokeswoman said.

"It follows approval from Australian and New Zealand regulators on the basis that our expanded partnership involved no detriment and would deliver significant benefits for consumers."
...
American Airlines spokesman Matt Miller said the DoT's decision, 17 months in the making, was a significant departure from previous rulings.

"Delta and Virgin Australia, and United and Air New Zealand have anti-trust immunity in their joint ventures, so that's a significant competitive advantage for those two alliances and that's what we were seeking," Mr Miller said.

"With that opportunity we would have been able to compete more effectively and increase consumer benefits in the market as well."

Qantas and American's code-share arrangement, struck in 2011, will remain in place.

 

[Pleb Status]

I assume that the AA flight will revert back to QF next year. Interesting what may happen with SYD-SFO (move to the 789 prehaps).

If AA get to keep the SYD-LAX flight, that will be a big win for them and a big loss for QF (provided the flights make money that is).

From a customer point of view, I think we will only be better off by the JV being knocked back.

 

[Hvr]

Qantas and AA have backed out of the venture:

Qantas Airways bales out of plan to grow US traffic through American Airlines deal

Shouldn't it be 'bails out'? Maybe an ironic comment since they don't get to make hay.

 

[MEL_Traveller]

I'm guessing if they felt they had a strong enough argument to support anti-trust for the JV they would have met the 14 day deadline. Otherwise you don't just 'give up' that easily?

 

[flychrisfly]

Seems a bit strange to me... Qantas backed out of the JV but it seems AA had more to gain? Couldn't find a news source that indicated AA had given up so why did Qantas?

 

[serfty]

Seems a bit strange to me... Qantas backed out of the JV but it seems AA had more to gain? Couldn't find a news source that indicated AA had given up so why did Qantas?

It was joint: American Airlines won't appeal decision blocking partnership with Qantas | American Airlines | Dallas News

 

[serfty]

Also: American Withdraws Its Application for Expanded Joint Venture With Qantas - View from the Wing

 

[flychrisfly]

It was joint: American Airlines won't appeal decision blocking partnership with Qantas | American Airlines | Dallas News

Thanks - makes sense.

 

[Danger]

As I read it everything that is currently in place, stays. It's only an expansion of the existing arrangement that has been knocked on the head. Correct?

 

[anat0l]

As I read it everything that is currently in place, stays. It's only an expansion of the existing arrangement that has been knocked on the head. Correct?

I imagine there will need to be a bit of rethinking as to how the money flows around the place (or rather lack thereof, each company on their own). I don't know if that will have an adverse effect on the profitability of the "new" routes; I imagine the reception has been positive on all of them overall, so hopefully they aren't going anywhere else, any time soon.