Order 2011-11-12

Served: November 9, 2011

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 9th Day of November, 2011

Joint Application of :

AMERICAN AIRLINES, INC.

and

QANTAS AIRWAYS LIMITED

under 49 U.S.C. § 41309 

for approval of Joint Business Agreement 

Docket DOT-OST-2011-0111

FINAL ORDER

I. SUMMARY

By this order, the Department of Transportation grants approval of the application of 

American Airlines, Inc. and Qantas Airways Limited (“American/Qantas”, “AA/QF” or 

“oneworld”). The oneworld applicants have requested approval to implement a Joint Business 

Agreement (“JBA”). These air carriers already have basic marketing agreements in place to sell 

each other’s products and services and are seeking to increase integration of their respective 

networks through the JBA. 

Based on our evaluation of the oneworld application, we determine that approving the JBA

would likely promote inter-alliance competition in the U.S.-Australia and U.S.-New Zealand

markets and produce a stronger overall competitive environment, leading to enhanced consumer 

benefits. 

By optimizing the joint network, the oneworld applicants state that they will be able to “more 

closely coordinate and improve their product offerings between the U.S. and the South Pacific.”1

 

More specifically, American and Qantas claim that approval of the JBA will result in improved 

network schedules, aligned frequent flyer benefits, new corporate and leisure fare products, 

 1 See Joint Application, at 6.
2

lower fares, and greater availability. We conclude that the oneworld applicants have provided 

evidence that substantial public benefits are likely to result from their proposed cooperation. 

These benefits include a broad range of service, fare, facility, and product improvements. 

Provided that the oneworld applicants abide by the conditions that we propose here, we 

conclude that the potential benefits of the application outweigh any potential harm. Therefore, 

we approve the Joint Business Agreement, subject to the conditions in Section V. 

II. SUMMARY OF THE RECORD

On June 8, 2011, the oneworld applicants filed the AA/QF Application, which included a 

copy of the JBA, in Docket DOT-OST-2011-0111. The Applicants note that they will not 

proceed with the proposed JBA absent approvals from the U.S. and Australian governments.

2

On June 10, 2011, we issued a Notice granting interim access to confidential documents 

submitted with the applications, limited to interested parties who filed confidentiality affidavits.3

 

We also declared the record in the case to be substantially complete and established a procedural 

schedule for public comments and responses. Answers were due on July 1 and replies were due 

on July 13. 

Dallas-Fort Worth International Airport (“DFW”) filed an answer. DFW expressed strong 

support for the American/Qantas application, encouraging the Department to approve this

application in order to allow AA and QF to better coordinate services related to QF’s new 

Dallas/Fort Worth–Sydney route as well as to enhance U.S.-South Pacific competition among 

global alliances.

4

 No other answers and no replies were filed. 

III. DECISIONAL STANDARDS

The request pending in this docket is for approval of a Joint Business Agreement between 

AA/QF.

Under 49 U.S.C § 41309, we engage in an analysis of foreign air transportation agreements 

submitted for our approval. We determine under § 41309(b) whether the agreements are adverse

to the public interest because they would substantially reduce or eliminate competition (the 

“competitive analysis”). If we make that affirmative determination, § 41309 (b)(1)(A) directs 

us to decide whether the agreements are nevertheless necessary to meet a serious transportation 

need or to achieve important public benefits; U.S. foreign policy goals are a key element of these 

benefits. If, however, we do not find the agreements to be adverse to the public interest, §

41309(b) directs us to approve them. 

 2 See Joint Application, at 4. 3 See Docket DOT-OST-2011-0111; Notice Providing Access to Documents and Suspending Procedural 

Schedule (June 10, 2011). 4 See Docket DOT-OST-2011-0111; Answer of Dallas-Fort Worth International Airport, at 1 (July 1, 2011). 
3

IV. DECISION

Under § 41309(b), we must determine whether the agreement is adverse to the public interest 

because it would substantially reduce or eliminate competition. The oneworld applicants 

provided, within their application, a competitive summary table using Marketing Information 

Data Tapes (“MIDT”) booking data.5 Between the U.S. and Australia, Qantas’ booking share 

totaled 40 percent, followed by immunized United/Air New Zealand at 27 percent and 

immunized Delta/V Australia at 22 percent. 

AA and QF have no overlapping nonstop transpacific routes. AA states that it does not have 

aircraft currently capable of providing nonstop service between the U.S. and Australia and that 

its existing labor agreements preclude nonstop flights over U.S.-South Pacific stage lengths.

6

Accordingly, we conclude that American is unlikely to become a nonstop competitor between 

the U.S. and Australia, and that no reduction in the number of nonstop competitors would result 

from approving the application. 

In their joint application, the oneworld applicants point to a number of benefits to be realized 

by consumers, including: (1) improved schedules and frequencies; (2) increased behind and 

beyond Pacific Gateway connecting opportunities; (3) joint use airport facilities; (4) improved 

coordination of connecting passengers and streamlined check-in; (5) new fare products and zonal 

fare reductions; (6) enhanced frequent flyer reciprocity; and (8) cohesive product offerings to 

corporate clients.7 

We have evaluated the claimed benefits in light of their commercial incentives, the 

provisions of the JBA, the structure and evolution of the transpacific market, and our historical 

experience with alliances. We specifically note the oneworld applicants’ intention to support and 

expand newly launched QF nonstop services, implement product enhancements, and invest in 

joint-use facilities.

8

Additionally, we find that approving the JBA will lead to enhanced inter-alliance competition

across the South Pacific. United and Air New Zealand have operated with immunity for 10 years 

and Delta and V Australia received antitrust immunity for their transpacific joint venture this 

year. Approving the AA/QF JBA will allow these oneworld carriers to deepen their cooperation, 

compete more effectively with the existing immunized carrier groupings, and create and sustain 

consumer benefits. 

Based on our analysis of the potential competitive effects and public benefits of the proposed 

agreements, we approve the oneworld JBA. 

 5 See Joint Application, at 15. 6 See Joint Application, at 2. 7 See Joint Application, at 5-6. 8 See Joint Application, at 5.
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V. CONDITIONS

In this section, we summarize and explain the proposed conditions and remedies to be 

applied to our approval of the JBA. 

A. ANNUAL REPORTING

We find that it is necessary for the oneworld applicants to report to the Department 

concerning commercial developments in their alliance and the degree to which the public 

benefits envisioned in the Application are being realized. As we have in recent decisions, we are 

requiring annual reporting.9 The report should focus on progress made toward achieving the 

JBA’s stated goals, specific actions taken to implement the JBA, present or future planned 

cooperation between AA/QF in all core airline functions, and a discussion of the public benefits 

that are being realized.

B. OPERATION UNDER A COMMON NAME

Because implementation of the oneworld applicant’s JBA could raise important consumer 

issues and “holding out” questions, if AA/QF choose to operate under a common name or use 

“common brands,” the oneworld applicants must seek separate approval from the Department 

prior to such operations. For example, it is Department policy to consider the use of a single air 

carrier designator code by two or more airlines to be unfair and deceptive, unless the airlines 

give reasonable and timely notice to passengers of the actual operator of the aircraft.10

ACCORDINGLY:

1. We approve the Joint Business Agreement11 between American Airlines, Inc., and 

Qantas Airways Limited, in so far as such agreements relate to foreign air 

transportation. Without regard to other conditions described in the ordering 

paragraphs below, the approval shall remain in effect indefinitely, subject to Ordering 

Paragraph 4, provided that the oneworld applicants:

a. Submit for prior approval subsequent subsidiary agreements implementing their 

most recent Joint Business Agreement;

12

b. Resubmit the JBA before five years from the date of issuance of this order;

c. Obtain prior approval if they choose to operate or hold out service under a 

common name or use common brands;

 9 See Star Final Order 2009-7-10, at 26 (July 10, 2009); oneworld Final Order 2010-7-8, at 15 (July 20, 2010) 10 See 14 C.F.R. § 399.82. 11 The Joint Business Agreement is Exhibit 1 of the Joint Application of American Airlines, Inc. and Qantas 

Airways Limited for approval of Joint Business Agreement (June 8, 2011).

12 Regarding this requirement, we do not expect the oneworld applicants to provide the Department with minor 

technical understandings that are necessary to implement fully their day-to-day operations but that have no 

additional substantive significance. We do, however, expect and direct them to provide the Department with all 

unredacted contractual instruments that implement or materially alter, modify, or amend the cooperation 

agreements, joint ventures, or confidentiality guidelines. 
5

2. We direct the oneworld applicants to file with the Director of the Office of Aviation 

Analysis a verified statement(s) in Docket OST-2011-0111 attesting that the Joint 

Business Agreement has been executed and implemented and a complete and 

unredacted copy of the most recent American/Qantas Joint Business Agreement and 

any appendices;

3. We direct the Applicants to submit annual progress reports to the Office of Aviation 

Analysis, beginning one year from the date of issuance of this order, and continuing 

each year thereafter while their JBA is effective;13

4. We determine that we may amend, modify, or revoke this authority at any time 

without hearing; and

5. We will serve this Order on all parties on the service list in this docket. 

By:

SUSAN L. KURLAND

Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available at: http://www.regulations.gov

 13 We expect the oneworld applicants to deliver the progress report by the close of business on the anniversary 

date. If that date falls on a weekend or federal holiday, the oneworld applicants may deliver the report by the close 

of business on the following business day.