On the heels of the Department of Transportation approval of the joint venture between Delta and Virgin Australia, American and Qantas applied to DOT for approval for their own joint business agreement for services between Australia and New Zealand to the US. Qantas is set to begin service to Dallas/Fort Worth in less than a week.
The move is a follow on to the March expansion of codesharing between the two carriers which gave American access to the Australian market. American will begin codesharing on Qantas' DFW services beginning May 16 and has already placed its code on Qantas services between Brisbane and Adelaide, Canberra, Cairns, Melbourne and Perth.
If approved, the strategic partnership will allow the two carriers joint scheduling but not revenue sharing because American does not now fly to Australia, although it could with the advent of is long-delayed 787s. It will also allow the two to maximise the advantages of Qantas’ new DFW service.
Qantas currently offers 41 scheduled round-trip flights per week between Australia/New Zealand and the US. These include 33 weekly flights to Los Angeles, four weekly flights to Honolulu and, beginning May 16, four weekly flights to Dallas/Fort Worth. Qantas also offers six weekly flights to New York via Los Angeles.
Delta, Virgin Blue Group revised ATI application
The Delta-Virgin Blue Group application to operate joint services between the US and Australia was original denied but the carriers won approval last week from the US DOT, which tentatively concluded the revised application produced enough public benefit to justify its grant of antitrust immunity. That gives Delta access to Virgin Australia, Virgin Blue and Pacific Blue flights in Australia and New Zealand.
In the new application, the Virgin Blue Group expanded the scope of the alliance to include service to more passengers. It also said that it had completed an upgrade of its reservation system to ensure compatibility with Delta’s system, providing consumers with a more seamless travel network. In addition, the carriers said they would serve more cities and offer more capacity at the start of their alliance than they originally proposed, providing more benefits to consumers at the outset.
The Delta partnership is a key part of Virgin Australia’s growing worldwide partnership strategy and is expected to counter Qantas’s dominance. In its announcement about the DOT approval, Delta noted that study by Compass Lexicon calculated the consumer benefits of up to USD54 million
Neither Delta/Virgin Australia nor American/Qantas quantified the impact these partnerships would have on their income.
The two oneworld partners said Qantas filed for approval with the Australian Competition and Consumer Commission (ACCC) and expects to file a similar document with the New Zealand Minister of Transport.
The two outlined the benefits of the joint-business partnership including joint strategic planning and management of trans-Pacific services as well as “behind-and-beyond” services in addition to improved schedules, frequencies and connection times. They said the joint pricing would result in more competitive fares and new fare products and joint marketing. They also pointed to the ability to earn miles and redeem rewards in each other’s frequent flyer programmes.
"This agreement has the potential to make travelling between Australia and the United States – and beyond – considerably more attractive for our customers, with better fares, improved connections and increased frequent flyer benefits," said Qantas Airlines Group Executive Commercial Rob Gurney, in making the announcement. “The JBA will take the strong relationship between oneworld partners Qantas and American to the next level.”
"By strengthening and broadening further our cooperative business partnership with Qantas, American will be better positioned to deliver enhanced benefits to our joint customers," said Virasb Vahidi, American's Chief Commercial Officer. "The expanded joint business agreement between American and Qantas will benefit our customers, financial partners, and employees. Qantas is one of our longest standing and most highly valued partners, and together we are creating a new joint platform from which to launch significant growth in air travel between North America and the South Pacific."