American Airlines and Qantas expand on US-Australia. Qantas reasserts its international role

American Airlines has returned to the South Pacific after two decades of absence. In doing so within a tight and longstanding partnership, Qantas, the resurgent Australian flag carrier has firmly set out to re-establish itself as a significant international force.

The South Pacific corridor between North America and Australia/New Zealand long appeared an anachronism. After a flurry of US airline entry in the early 1990s, the US-Australia market became limited in direct competition and large intermediary hubs. The 2008 open skies agreement allowed the entry of Delta and then-V Australia (now Virgin Australia), but they quickly paired up to challenge larger rivals Qantas, United and Air New Zealand. Despite the latter two being members of Star Alliance, Air NZ and United were effectively competitors while Qantas plied the route on its own. Elsewhere, global alliances came to define the trans-Atlantic, North Pacific and EU-Japan markets.

Now the South Pacific too will be defined by partnerships. American Airlines will launch Los Angeles-Sydney service in Dec-2015 after years of relying on Qantas to feed AA's domestic network. There will now be pressure on Air New Zealand and United to look for synergies (or more) while the small position of Virgin Australia and Delta will surely be squeezed. American was previously rumoured to be considering direct services to New Zealand, and has again revived that potential by suggesting that may be next on the list. The competitive balance overall will inevitably be defined by the way the respective partners (or potential partners) proceed from here.