BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Joint Application of

AMERICAN AIRLINES, INC.

 

and

QANTAS AIRWAYS LIMITED

Under 49 U.S.C. §§ 41308 and 41309 for 

Approval of and Antitrust Immunity for 

Proposed Alliance

 Docket No. DOT-OST-2015-

 

 

JOINT APPLICATION FOR APPROVAL AND ANTITRUST IMMUNITY 

FOR PROPOSED ALLIANCE

Communications with respect to this document should be sent to:

For American Airlines: For Qantas Airways:

R. Bruce Wark Andrew Finch 

Vice President and Deputy General Counsel General Counsel and Company Secretary

James Kaleigh Anna Pritchard

Senior Antitrust Attorney Head of Legal – Competition

Kurt Stache Qantas Airways

Senior Vice President – Alliances QCA/1, 10 Bourke Road,

American Airlines, Inc. Mascot NSW 2020

433 Amon Carter Blvd. andrewfinch@qantas.com.au

Fort Worth, Texas 76155 annapritchard@qantas.com.au

bruce.wark@aa.com

james.kaleigh@aa.com

kurt.stache@aa.com

Howard Kass

Vice President – Regulatory Affairs

Robert A. Wirick

Managing Director Regulatory & International Affairs

American Airlines, Inc.

1401 H St., N.W. 

Washington, D.C. 20005

howard.kass@aa.com

robert.wirick@aa.com

June 9, 2015
TABLE OF CONTENTS

I. INTRODUCTION............................................................................................................ 3

II. THE PARTIES’ EXISTING RELATIONSHIP HAS PRODUCED 

SUBSTANTIAL CUSTOMER BENEFITS .................................................................. 5

A. The Original JBA was an Evolution of the Parties‘ Longstanding 

Collaboration.......................................................................................................... 5

B. The Original JBA Has Yielded Substantial Public Benefits.................................. 6

III. RECENT DEVELOPMENTS NECESSITATE REVISIONS TO THE 

PARTIES’ RELATIONSHIP, WHICH WILL EXPAND CUSTOMER 

BENEFITS AND ENHANCE COMPETITION......................................................... 15

A. American‘s Successful Reorganization and its Merger with US Airways 

has Enabled American to Operate Trans-Pacific Service Alongside Qantas ...... 16

B. The Proposed Alliance Enables the Parties to Adapt to New 

Circumstances...................................................................................................... 17

C. The Proposed Alliance Continues and Expands the Customer Benefits of 

the Original JBA .................................................................................................. 20

IV. THE PROPOSED ALLIANCE EASILY MEETS THE DEPARTMENT’S 

LEGAL STANDARDS FOR GRANTING APPROVAL AND ANTITRUST 

IMMUNITY.................................................................................................................... 24

A. The Department has Articulated Clear Standards of Review for Approval 

and Antitrust Immunity Applications .................................................................. 24

B. The Proposed Alliance Should Be Approved Because It Promotes the 

Public Interest by Providing Important Public Benefits without 

Substantially Reducing Competition in any Relevant Market............................. 25

C. The Public Interest Requires a Grant of Antitrust Immunity and the Parties 

Will Not Proceed With the Proposed Alliance Without Antitrust Immunity ...... 29

V. CONCLUSION .............................................................................................................. 33
American-Qantas 

Joint Application

Page 1

JOINT APPLICATION OF 

AMERICAN AIRLINES, INC. AND QANTAS AIRWAYS LIMITED 

FOR APPROVAL OF AND ANTIRUST IMMUNITY FOR PROPOSED ALLIANCE

Executive Summary1

American Airlines and Qantas Airways seek approval of, and antitrust immunity for, a 

Proposed Alliance that will build upon and expand the success of their Original Joint Business 

Agreement which was approved by the Department in 2011. The Proposed Alliance will do even 

more than the Original JBA, further increasing capacity, reducing travel times, generally 

improving the customer experience, and increasing competition. 

The Original JBA has been a tremendous success for customers and for the Parties to the 

agreement. By improving their joint product offering, American and Qantas realized the 

potential for customer benefit recognized by the Department‘s approval order. Although their 

largest competitors, Delta-Virgin Australia and United-Air New Zealand, have had the 

significant competitive advantage of antitrust immunity from the Department, the Parties 

increased competition, added capacity to the market, and garnered significant incremental 

passenger traffic. 

At the time the Original JBA was approved, American was not able to serve Australia 

due to equipment and labor agreement limitations, and the Parties, therefore, were unable to 

adopt the fully integrated alliance structure that the Department has recognized leads to the 

greatest customer benefits. Those constraints have been removed and the Parties propose to 

expand their collaboration by adding American-operated service between the U.S. and Australia 

and by adopting a fully metal-neutral alliance structure to facilitate the greatest possible 

 

1 Capitalized terms are defined in the body of the Application.
American-Qantas 

Joint Application

Page 2

integration and maximum possible customer benefits. With more complete integration, a better 

alignment of incentives and the elimination of inefficiencies like double marginalization in their 

fare structures, American and Qantas will be able to compete more effectively and on more equal 

footing with the immunized Delta (SkyTeam)-Virgin Australia and United-Air New Zealand

(Star) alliances. The Parties project further incremental passenger traffic gains, which 

demonstrate the additional customer benefit that they can deliver. But the extent of integration 

required to generate these benefits creates too great an antitrust risk for the Parties to be able to 

go forward without antitrust immunity.

This pro-competitive Proposed Alliance presents the most compelling case yet under the 

Department‘s long-standing criteria for granting for antitrust immunity. No existing competition 

will be lessened because the Parties do not currently compete. To the contrary, competition will 

be immediately increased as the Proposed Alliance will foster more integrated service and add 

capacity on the high-traffic Los Angeles-Sydney and San Francisco-Sydney routes (the latter 

currently served only by United). Competition will be further increased as rivals react to these 

improvements and the Proposed Alliance adds capacity to other routes. Customers, once again, 

are the beneficiaries. But antitrust immunity is necessary because without it, the history of 

antitrust litigation, particularly in the airline industry, makes the full integration of the Proposed 

Alliance too risky to maintain. 

The Parties respectfully request prompt approval of, and antitrust immunity for, the 

Proposed Alliance.
American-Qantas 

Joint Application

Page 3

I. Introduction

American and Qantas2(the ―Parties‖ or ―Joint Applicants‖) apply (the ―Application‖) 

under 49 U.S.C. §§ 41308 and 41309 for approval of, and antitrust immunity for, an Amended 

and Restated Joint Business Agreement (―Restated JBA‖), an Alliance Agreement, and other 

implementing agreements (collectively the ―Proposed Alliance‖).

3

American and Qantas currently operate a Joint Business Agreement (―Original JBA‖), 

which the Department of Transportation (―Department‖), the Australian Competition & 

Consumer Commission (―ACCC‖), and the New Zealand Ministry of Transportation

(―NZMOT‖) all approved in 2011.

4

This relationship has already produced substantial public 

benefits and increased competition by offering passengers better access to the Parties‘ extensive 

networks in North America, Australia, and New Zealand, increased capacity, and improved 

products and services. Passenger traffic between the U.S. and Australia has increased. By now

creating a metal-neutral alliance structure, the Proposed Alliance will further benefit passengers 

 

2 Common names are used throughout. ―American‖ includes American Airlines Group Inc., 

along with its principal, wholly-owned subsidiaries American Airlines, Inc., US Airways Group, 

Inc. (―US Airways‖), Envoy Aviation Group Inc. (formerly known as AMR Eagle Holding 

Corporation), and include commercial activities by non-wholly-owned affiliates operating as 

American Eagle. ―Qantas‖ includes Qantas Airways Limited, along with all Qantas affiliates 

including Jetstar Airways Pty Limited.

3

See Exhibit 1, Alliance Agreement; see also Exhibit 2, the Restated JBA, the Alliance 

Settlement Agreement, Amendment No. 5 to the Original JBA, and the Codeshare Agreement 

(collectively, filed as part of the Parties‘ Confidential Production Pursuant to the Motion of Joint 

Applicants for Confidential Treatment). In addition to the Restated JBA and Alliance 

Agreement, the Parties seek approval and antitrust immunity for any related and future 

agreements necessary to implement these agreements. See Exhibit 3, summary of material terms 

of the Restated JBA.

4

See Exhibit 4, American-Qantas Final Order 2011-11-12 (Nov. 9, 2011); Exhibit 5, ACCC, 

Determination of Applications for Authorisation by Qantas Airways Limited & American 

Airlines Inc., 29 September 2011; Exhibit 6, New Zealand Ministry of Transportation 

authorization letter, dated 27 September 2011.
American-Qantas 

Joint Application

Page 4

without reducing competition and, consistent with the Department‘s precedent, warrants prompt 

approval and full antitrust immunity.

Circumstances have changed since the Parties‘ Original JBA was approved in 2011, 

enabling American and Qantas to expand the scope of their collaboration. Following the

successful reorganization and merger of American and US Airways, American has the capability

to add service between the U.S. and Australia/New Zealand for the first time in over twenty 

years. American-operated service on Trans-Pacific routes will facilitate the introduction of 

additional routes and improved connectivity for customers while enhancing competition on the 

Trans-Pacific routes the Parties currently serve.5

Accordingly, the Parties seek to expand their existing joint business through the Proposed 

Alliance to facilitate the introduction of American-operated joint business flights alongside

flights already operated by Qantas. The Restated JBA features a truly metal-neutral arrangement 

with the parties coordinating on scheduling, network planning, sales, customer services, and 

capacity decisions to efficiently integrate the Parties‘ operations and compete more effectively 

and on the same footing as Delta (SkyTeam)-Virgin Australia and United-Air New Zealand

(Star), which have had antitrust immunity on their Trans-Pacific alliances for years.6

 

5

For purposes of this document, ―Trans-Pacific‖ refers only to flights between North America 

and Australia/New Zealand. Today, Qantas is the only Joint Applicant that operates TransPacific service to and from Australia/New Zealand. The trunk routes that Qantas operates to the 

mainland U.S. are LAX-SYD, LAX-MEL, LAX-BNE, and DFW-SYD. Qantas also operates

flights on YVR-SYD and HNL-SYD. Its Jetstar affiliate also serves HNL-MEL and HNL-BNE.

6

SkyTeam founding member Delta enjoys an immunized alliance with Virgin Australia, 

formerly Virgin Blue Airlines. See Delta-Virgin Blue Group Final Order 2011-6-9 (June 10, 

2011). On June 4, 2015, the ACCC issued a Draft Determination and Interim Authorisation of 

that alliance (―Delta-Virgin Australia ACCC Draft Determination and Interim Authorisation‖).

Star enjoys an immunized alliance between United and Air New Zealand. See United-Air New 

Zealand Final Order 2001-4-2 (April 3, 2011).
American-Qantas 

Joint Application

Page 5

Given that American-operated service between U.S. and Australia would make the 

Parties competitors, the extent of integration necessary to create the desired customer benefits 

creates too great a risk under applicable antitrust laws and therefore cannot be undertaken

without a grant of antitrust immunity. Accordingly, the Parties now require antitrust immunity in 

order to deliver the additional customer benefits that the Parties expect to achieve moving 

forward with this plan.

7

II. The Parties’ Existing Relationship Has Produced Substantial Customer Benefits

A. The Original JBA was an Evolution of the Parties‘ Longstanding Collaboration

The longstanding relationship between American and Qantas began almost thirty years

ago when the carriers first allowed passengers to earn and redeem frequent flyer miles on each 

other‘s flights. At that time, Qantas was just the second frequent flyer partner of American. The 

Parties entered into a codeshare agreement in 1989 and were two of the founding members of the 

oneworld alliance in 1999. American and Qantas expanded their codeshare agreement further 

after the U.S. and Australia signed an Open Skies agreement in 2008. 

The Parties entered into the Original JBA in 2011, initiating a closer relationship between 

the carriers and offering customers a more integrated and competitive product. Prior to 2011,

American had not operated service to Australia in nearly twenty years, and lacked the ability to 

offer Trans-Pacific service because of fleet limitations and restrictions in its labor agreements. 

As a result, the Parties had no overlapping routes in 2011. In approving the Original JBA in 

2011, the Department acknowledged that the agreement promised to deliver a host of public 

benefits, including ―improved network schedules, aligned frequent flier benefits, new corporate 

 

7

The Parties are also seeking authorization from the ACCC and NZMOT.
American-Qantas 

Joint Application

Page 6

and leisure fare products, lower fares, and greater availability.‖8The Department also concluded 

that the Original JBA would bring about competitive synergies by ―promot[ing] inter-alliance 

competition in the U.S.-Australia and U.S.-New Zealand markets and produc[ing] a stronger 

overall competitive environment.‖9 

The Original JBA has exceeded the initial promise identified by the Department in 2011. 

The scope of the Parties‘ collaboration has grown since the Original JBA was implemented. 

Today, American codes on 26 Qantas routes, including all Trans-Pacific routes. Qantas codes on 

120 American routes (including 107 U.S. routes, 8 Canadian routes, and 5 in Latin 

America/Caribbean) and has access to 76 more through interline connections. Qantas has 

expanded its codesharing on American-operated flights by 33%, offering service on 86% more 

destinations.

10

 Passengers on both sides of the Pacific have benefitted from the coordination 

between American and Qantas under the Original JBA and the enhanced competition on TransPacific routes that it has fostered.

B. The Original JBA Has Yielded Substantial Public Benefits 

The joint business between American and Qantas has been so successful because it 

combines two highly complementary networks.11 Passengers rely on Qantas‘ network to access 

destinations around Australia and the Pacific and American‘s network to link Qantas‘ gateways 

with hundreds of U.S. and international destinations.12 Worldwide, Qantas and American serve 

70 and 312 airports, respectively, empowering passengers to travel to more than 5,000 city pairs 

 

8

Exhibit 4, American-Qantas Final Order 2011-11-12, at 1-2 (Nov. 9, 2011). 

9

Id. at 1.

10 See Exhibit 7, American-Qantas Codeshare Flights and Destinations.

11 See Exhibit 8, Complementary Networks of American and Qantas.

12 See Exhibit 9, Qantas Domestic and International Routes through Sydney; Exhibit 10, Qantas 

Gateways Connecting to U.S. Destinations through American Hubs.
American-Qantas 

Joint Application

Page 7

on the Parties‘ combined network.13 Passengers connecting at either end of Qantas‘ Los Angeles

(―LAX‖) - Sydney (―SYD‖) flights traveled in 2014 to a total of 283 destinations (53 beyond the 

Australian gateway and 230 beyond the U.S. gateway). Similarly, passengers connecting at 

either end of Qantas‘ Dallas/Fort Worth (―DFW‖) - SYD flights traveled to a total of 305 

destinations in 2014 (61 beyond the Australian gateway and 244 beyond the U.S. gateway).14

Given the benefit to passengers of the combined network, the Original JBA has resulted 

in significant gains in passenger traffic since it was implemented in 2011. To enable that traffic 

growth, the Parties significantly increased capacity. Between 2011 and 2014, 35% more seats 

were added to Qantas flights between mainland U.S. and Australia, increasing total available seat 

miles (―ASMs‖) by 37%.

15 Passenger traffic between mainland U.S. and Australia on Qantas 

flights increased by nearly 25%.16 Many of these capacity and traffic gains related to Qantas‘ 

new DFW service and American‘s improved service through LAX. In addition, coordination by 

the Parties on multiple dimensions of the service offering has attracted incremental passengers 

and conferred on all alliance passengers the benefits described below.

1. Expanded capacity and increased connectivity through the successful 

launch of the Dallas/Fort Worth gateway

The Original JBA enabled the introduction of Qantas‘ service between DFW and

Australia starting in May 2011. The introduction of DFW service provided passengers new 

 

13 Total possible American/Qantas connection city pairs were calculated by including all 

codeshare and interline flights and excluding: (1) flights operated or marketed by other airlines; 

(2) flights with more than two connections; (3) flights with connection times of more than 12 

hours; and (4) flights with a circuity factor over 2.5.

14 These numbers represent actual destinations flown to by passengers traveling on Qantas‘ 

LAX-SYD and DFW-SYD routes.

15 See Exhibit 13, Qantas Mainland U.S. to Australia ASMs and Seats: 2011 vs. 2014.

16 See Exhibit 12, Year-over-Year Qantas Passenger Traffic between Mainland U.S. and 

Australia.
American-Qantas 

Joint Application

Page 8

connections through American‘s largest hub airport and easy access to and from the Dallas/Fort 

Worth metropolitan area, itself a rapidly growing business and tourism destination. Connections 

through DFW make Trans-Pacific travel more efficient by providing streamlined access to

American‘s extensive network across the U.S., Canada, Mexico, and Latin America.

17

 

For 99 cities in the U.S. and 25 additional cities abroad, the introduction of DFW service 

also meant shortening itineraries from two stops through LAX to a single stop through DFW. 

Thus, passengers who might previously have flown DCA-STL-LAX-SYD were given the option 

to travel DCA-DFW-SYD. As a result, travel times for passengers flying between Washington 

(―DCA‖) and Sydney were slashed by almost two hours. Flights to Sydney from other cities 

such as Charlotte, El Paso, Indianapolis, Detroit and Mexico City enjoyed savings of over an 

hour in travel time. 

In September 2014, due to the sustained popularity of the DFW service, Qantas upgauged its B747 service to its flagship A380, expanding capacity by over 13,000 seats from 

2013.18 The switch included the introduction of new premium service classes, with fourteen

First Class and eight Business Class seats added to each flight. Further, up-gauging to the A380

eliminated the need for a stopover in Brisbane (―BNE‖) on westbound service to Sydney, giving 

travelers the benefit of fewer stops en route to their destinations.

These enhancements to the Parties‘ DFW service have proven popular with passengers as 

demonstrated by significant, steady gains in traffic and capacity since the route was launched:

 

17 See Exhibit 11, American DFW Domestic and International Connections.

18 See Exhibit 14, Qantas Mainland U.S. to Australia Scheduled Seat Capacity.
American-Qantas 

Joint Application

Page 9

Between 2011 and 2014, the Parties increased seat capacity on Qantas flights to and from 

DFW from roughly 100,000 to 276,000, a 166% increase.19 Over the same period, passenger 

traffic grew from approximately 70,000 to nearly 200,000, a 196% uptick. Anticipating 

continued growth in demand, Qantas scheduled an additional 31,168 seats for 2015 as compared 

to 2014. 

 

19 See Exhibits 12 and 14, containing the data from which the DFW passenger traffic and seat 

capacity graphs above were created, respectively.

- 

50,000 

100,000 

150,000 

200,000 

250,000 

300,000 

350,000 

2010 2011 2012 2013 2014 2015

Qantas Annual Scheduled Seat 

Capacity between DFW and Australia

- 

50,000 

100,000 

150,000 

200,000 

250,000 

2010 2011 2012 2013 2014

Qantas Annual Passenger Traffic 

between DFW and Australia
American-Qantas 

Joint Application

Page 10

2. Increased frequency, capacity, and services through Los Angeles

The Original JBA enabled Qantas to consistently expand its services through LAX. In 

December 2013, Qantas increased the frequency of its Los Angeles to/from Brisbane service to a 

daily service, resulting in a 12% increase in capacity. Since January 2015, Qantas has increased

its LAX to/from Melbourne (―MEL‖) service from daily to ten flights per week and revised 

schedules so that Qantas is the only carrier to offer morning, afternoon and evening return 

departures from Australia back to the U.S.

These expanded services have driven significant and consistent gains in passenger traffic

through LAX during the lifespan of the Original JBA:

1,000,000 

1,050,000 

1,100,000 

1,150,000 

1,200,000 

1,250,000 

1,300,000 

1,350,000 

2010 2011 2012 2013 2014 2015

Qantas Annual Scheduled Seat 

Capacity between LAX and Australia
American-Qantas 

Joint Application

Page 11

Between 2011 and 2014, traffic on Qantas-operated flights to LAX expanded by over 

100,000 passengers, a 12% increase.20 This year, in order to serve this demand, Qantas 

scheduled 95,000 more seats for LAX service than were available in 2014.

Qantas‘ expansion of capacity and traffic through LAX has also supported the growth of 

American‘s hub in Los Angeles. American‘s flights out of LAX expanded from 42 destinations 

in 2011 to 51 by the end of 2014. Last year, American launched additional flights from LAX to

new destinations like Vancouver and Atlanta. The Original JBA has been so successful at LAX 

that the Parties intend to add services and increase capacity as part of the Proposed Alliance.

21

 

3. Improved airport services and customer experience

The Parties collaborate on airport operations and management through the Joint Business 

Airport Working Group, which has enabled service improvements, particularly for passengers 

transferring at key gateways like LAX. The Parties‘ respective operational teams meet regularly 

 

20 See Exhibits 12 and 14, containing the data from which the LAX passenger traffic and seat 

capacity graphs were created, respectively.

21 See Section III.

750,000 

800,000 

850,000 

900,000 

950,000 

1,000,000 

2010 2011 2012 2013 2014

Qantas Annual Passenger Traffic 

between LAX and Australia
American-Qantas 

Joint Application

Page 12

to manage and improve the transfer experience. Monthly local management meetings are held at 

both LAX and DFW airports to review through-check systems and baggage transfer systems and 

collaborate on improving the efficient transfer of passengers between the Parties‘ networks. 

Additionally, during construction at LAX in 2013 and 2014, the Parties collaborated to improve 

the connection experience at LAX by creating a dedicated transfer gate area in T4 (where 

American domestic flights operates from) to enable connections to TBIT (where Qantas departs 

from). The improvements included a Qantas check-in counter and a bus access to enable better 

inter-terminal transfers. In 2013, American and Qantas aligned hotel and restaurant voucher 

practices for Premium customers during flight disruption. 

4. Better products for corporate customers and agencies 

The Original JBA has yielded significant benefits for corporate customers and agencies. 

First, the Original JBA has helped the Parties simplify corporate fares and streamline the 

procurement process for customers. The Parties are now better-positioned to meet the demands 

of corporate customers for alliance-based deals based on their respective experience and 

relationships. American and Qantas also enjoy improved marketing and promotion for joint fare 

products through their respective home point-of-sale strengths. The Parties currently have 

approximately 150 joint business contracts with large corporate customers who benefit from joint 

pricing opportunities across extended flying networks, a majority of which did not have any 

corporate discount program from American or Qantas on flights to Australia prior to the Original 

JBA. The Parties have provided more choice and discounted pricing alternatives to a significant 

number of customers that are part of the $300 million annual corporate travel segment for North 

America to Australia travel. Some 25,000 annual corporate travelers access discounts through 

these American and Qantas programs.
American-Qantas 

Joint Application

Page 13

Second, the Original JBA has improved benefits for Business ExtrAA members, 

American‘s reward program targeted at Small and Medium Enterprise (―SME‖) customers. 

Business ExtrAA customers became eligible for point accrual on American/Qantas flights in 

February 2013. Some 4,900 passengers annually now earn Business ExtrAA points flying

Qantas-operated flights to and from Australia – benefits they would not have enjoyed absent the 

Original JBA. SME customers also benefitted from a double-points promotion targeted at SME 

accounts, which has resulted in additional opportunities for SME customers to accrue points 

while traveling to Australia. Certain corporate customers have also enjoyed special 

accommodations when traveling between the Parties‘ networks, including retiming certain flights 

to make certain itineraries more efficient. 

Third, the Parties have also developed a new sales model to help develop agency partner 

business and marketing plans. Representatives from both airlines attend meetings with agents to 

ensure the codeshare and network offerings are appropriately promoted. Qantas promotes 

American on the Qantas Industry Sales Site and through the Qantas Industry Centre, including 

by advising travel agents of updates to American‘s schedule and product offerings and by

providing sales, servicing and operational support, ensuring that joint customers are provided 

streamlined assistance by those travel agents. The Parties have also held joint agency partner 

events to showcase the joint network, including at a recent event in Sydney in November 2014. 

Likewise, American has been able to provide additional benefits to certain agencies by providing 

a new upfront commission program for American bookings on Qantas-operated flights. These 

commissions were not provided prior to the Original JBA; now agencies benefit when booking 

either carrier.
American-Qantas 

Joint Application

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5. Better frequent flyer programs

Over the course of the Original Joint Business, the Parties have implemented 

comprehensive, reciprocal privileges for each other‘s frequent flyers when traveling on the other 

airline. The carriers now offer what is effectively fully reciprocal, earn-and-burn programs

between the two airlines on all domestic and international flights. In June 2012, American

introduced the ability for AAdvantage members to book awards on Qantas on AA.com, 

facilitating even greater visibility for the program. Since August 2013, members of the Parties‘ 

loyalty programs earn points in all fare classes on both airlines‘ marketed services.22

The Parties‘ fully reciprocal frequent flyer privileges have greatly benefited passengers 

over the life of the Original JBA. AAdvantage members have earned nearly 3.6 billion miles 

flying on Qantas, whose Frequent Flyers in turn have earned 1.5 billion miles on American 

flights. Between 2011 and 2014, total miles earned by both Parties‘ passengers have increased 

by 9%. All told, AAdvantage members have redeemed awards on over 164,000 Qantas-operated 

flights, while Qantas‘ Frequent Flyers have redeemed awards on over 129,000 Americanoperated flights since 2011.

6. Sales, marketing, and tourism

Under the Original JBA, the Parties have coordinated closely to conduct joint marketing 

programs focused on generating more traffic for the joint network and stimulating tourism. Cobranded marketing initiatives have helped the Parties better utilize their home market sales and 

distribution networks while avoiding duplication. American and Qantas sales representatives 

 

22 AAdvantage members are now eligible to earn 50% mileage credit in discount N class, and 

25% mileage credit in Q class on Qantas-marketed flights, while Qantas FFP members are now 

eligible to earn 25% in O & Q discount classes on American-marketed flights. In addition, 

Qantas increased the status bonus from 50% to 75% for Qantas FFP Gold Status members on AA 

marketed flights.
American-Qantas 

Joint Application

Page 15

have worked together to develop effective strategies and conduct joint sales calls to trade 

partners. American‘s sales representatives in Australia have benefitted by gaining access to key 

travel partners in Australia, promoting not only the American/Qantas joint business and network 

benefits, but also to help promote the U.S. as a top travel destination for Australians.

American also supported the marketing launch for Qantas‘s new DFW-SYD services, and

worked with Qantas to raise the visibility for the route by coordinating messages and marketing 

materials through newsletter, web advertising, and social media channels. There are numerous 

other examples of American working with Qantas on major marketing initiatives to support the 

joint network. The Parties have consistently and successfully utilized each other‘s marketing 

assets to maximize reach:

  ̳Discover USA‘ was a sweepstake offered at the Australian point of sale to promote 

travel to the U.S. and raise awareness of Qantas‘ network, service frequency and 

relationship with American. Frequent Flyers were encouraged to earn and burn miles on 

American for the chance to win a luxury trip for two to Las Vegas.

 In 2012 Qantas ran a promotion with American associated with the ―G‘day USA‖ 

campaign, which was designed to promote travel from Australia to the U.S. (and vice 

versa). 7,000 Qantas Frequent Flyers entered this competition. 

 In April 2012, the Parties launched a joint promotion offering AAdvantage bonus 

miles/Qantas Frequent Flyer points for travel between Australia and the U.S.

 In February 2015, Qantas ran a promotion, supported by American, offering members the 

chance to win a business class trip to Las Vegas, flying with Qantas and American. 

41,000 Qantas Frequent Flyer members entered this competition.

III. Recent Developments Necessitate Revisions to the Parties’ Relationship, Which Will 

Expand Customer Benefits and Enhance Competition

As described above, the Original JBA has delivered substantial benefits to customers 

since its inception in 2011. Circumstances have changed, however, and now American and 

Qantas have a unique opportunity to further expand their relationship and offer greater benefits 
American-Qantas 

Joint Application

Page 16

through the Proposed Alliance. 

A. American‘s Successful Reorganization and its Merger with US Airways has 

Enabled American to Operate Trans-Pacific Service Alongside Qantas

American‘s parent, AMR Corporation, in November 2011 filed voluntary petitions for 

relief under Chapter 11 of the U.S. Bankruptcy Code. In October 2013, the Bankruptcy Court 

entered an order approving and confirming the Debtor‘s plan of reorganization.23 American‘s 

emergence from reorganization included the merger of American and US Airways in December 

2013, bringing together two highly complementary domestic networks that offer travelers access 

to more destinations with greater ease. The merger also allowed American to proceed with 

substantial new investments in its fleet, equipment, facilities and other improvements. And, 

importantly, the merger allowed American to reach new agreements with its labor groups, 

including pilots, enabling flights to new destinations.

Accordingly, American now has the ability to introduce service between Australia/New 

Zealand and the U.S., which was simply not possible at the inception of the Original JBA. These 

developments permit the expansion of joint business activities on Trans-Pacific routes and thus 

require the Parties to revise their agreement. In doing so, the Parties propose to adopt a fully 

metal-neutral alliance structure in order to compete effectively and on equal footing with the 

immunized Trans-Pacific alliances of Delta (SkyTeam)-Virgin Australia and United-Air New 

Zealand (Star), and to provide still greater benefits to passengers.

 

23 See Findings of Fact, Conclusions of Law, and Order Pursuant to Sections 1129(a) and (b) of 

the Bankruptcy Code and Rule 3020 of the Federal Rules of Bankruptcy Procedure Confirming 

Debtors‘ Fourth Amended Joint Chapter 11 Plan, In re AMR Corp., Case No. 11-15463 (SHL) 

(Bankr. S.D.N.Y. Oct. 22, 2013), ECF No. 10367.
American-Qantas 

Joint Application

Page 17

B. The Proposed Alliance Enables the Parties to Adapt to New Circumstances 

American and Qantas entered into the Alliance Agreement and Restated JBA on June 9, 

2015, each of which will have an initial term of 10 years following regulatory approvals. The 

Proposed Alliance recalibrates and expands the scope of the Original JBA similar to American‘s 

other joint businesses that were previously approved by the Department.

24

 Critically, the 

Proposed Alliance between American and Qantas is intended to implement a metal-neutral joint 

business between the Parties where the Parties enjoy the rewards of collaboration and share the

economic risks without regard to which carrier is operating a particular segment. The structure 

of the agreement is designed to align the Parties‘ incentives and drive investment and further 

integration of their networks through cooperation.25 As the Department has recognized, these 

arrangements benefit customers and alliances alike.26 The Restated JBA is designed to generate 

these benefits, and notes that ―the parties intend to achieve  ̳metal neutral‘ selling . . . in order to 

maximize customer benefit by increasing service options as well as fare benefits, providing 

customers with a broad range of competitively priced products.‖

27

The Restated JBA covers all long-haul Trans-Pacific routes between North America and 

Australia/New Zealand, and its management structure is designed to ensure close collaboration 

 

24 See American – Japan Airlines Final Order 2010-11-10 (Nov. 10, 2010); see also oneworld 

Trans-Atlantic JB Case Final Order 2010-7-8 (July 20, 2010). 

25 Restated JBA § 5.1.

26 Delta-Virgin Blue Group Final Order 2011-6-9, at 4 (June 10, 2011) (explaining that, ―in a 

 ̳metal-neutral‘ sales environment, with revenue- or benefit-sharing, the airlines can balance risks 

and benefits for the benefit of the consumer and alliance as a whole. The airlines are willing to 

cooperatively price itineraries because they share the same incentive to make the sale and share 

the revenues‖).

27 Restated JBA § 5.1.
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between the parties.28 The new joint business will be governed by a Management Committee 

whose decisions require a unanimous vote by members from both Parties.29 The Restated JBA 

also provides for a Steering Committee to set major policy decisions and resolve disputes of the 

Management Committee, and its decisions must also be made through unanimous vote.30 

Functional Committees consisting of representatives from each Party will assist in implementing 

initiatives in key areas such as revenue management, network planning, reservations, and airport 

services.31

The Restated JBA promises to improve customer experience by providing for 

commitments by the Parties to work together in a number of key areas, including:

 Coordinating schedules. The Parties commit to coordinating the schedules of joint 

business flights ―in order to minimize connecting passenger waiting time and to 

maximize passenger convenience and service, subject to their respective operational 

constraints and commercial considerations.”

32

 Launching additional routes. As noted in the Restated JBA, ―It is the intent of the 

parties that each of them be encouraged to explore and pursue new growth opportunities, 

which would create new customer benefits in addition to revenue benefits for the Joint 

Business... includ[ing] the parties exploring new potential gateways in North America 

and the Australian Region.‖

33

 Aligning sales organizations. Under the Restated JBA, the Parties agree to ―develop a 

joint business organizational structure to ensure the alignment of the parties across the 

Joint Business, to enable the parties to respond swiftly and efficiently to market demand 

and facilitate the delivery of improved customer benefits.‖

34

 To ensure metal-neutral 

selling, the agreement also provides that ―[a]ny incentives for carriers‘ respective sales 

 

28 See Exhibit 3, summary of material terms of the Restated JBA (explaining that the joint 

business scope covers services of the Parties and their affiliates flying non-stop between North 

America (including Puerto Rico and the U.S. Virgin Islands but excluding Hawaii, Guam and 

other U.S. territories) and Australia/New Zealand 

29 Restated JBA § 4.1.

30 Restated JBA § 4.2.

31 Restated JBA § 4.3.

32 Restated JBA § 3.1.1.

33 Restated JBA § 3.2.2.

34 Restated JBA § 5.2.
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forces to sell the Joint Services will include all routes of the Joint Services regardless of 

operating carrier.‖

35

 Pricing philosophy. The Parties shall endeavor to develop General Pricing Guidelines 

that enable the Joint Business to (i) provide customers with a broad range of 

competitively priced Services on as many city-pair routings within the Joint Business as 

practicable, (ii) remain competitive in the markets served, (iii) respond swiftly and 

efficiently to market demand, (iv) standardize the price distribution process and (v) 

maximize selling opportunities.36

 Expanding discounted fare options. Per the Restated JBA, the Parties intend to explore 

a new dealing strategy in order to ―introduce new Capacity and greater availability of 

discounted fares.‖37

 Inventory availability. The Parties shall coordinate to improve access to inventory of 

Trans-Pacific joint business flights and flights connecting to those Trans-Pacific joint 

business flights to ensure a level of availability for customers.38

 Ensuring quality control. ―The parties agree to use commercially reasonable efforts to 

work together to achieve reasonable target customer satisfaction levels for the Joint 

Services in the following quality categories: overall customer satisfaction, comfort, 

ground experience, entertainment, catering, crew, reservations, ticket counter efficiency, 

boarding efficiency, lounges, baggage delivery, punctuality and any other attribute as 

may be mutually agreed.‖

39

The Alliance Agreement complements the Restated JBA by providing an overarching 

framework for the types of collaboration envisioned by the parties. In addition to providing for 

the implementation of the Restated JBA, the Alliance Agreement covers additional agreements 

between the parties including a Codeshare Agreement, a Lounge Access Agreement, and 

Frequent Flyer Agreements.40 The Alliance Agreement also reflects the Parties‘ intent to 

coordinate in a number of areas, including: (1) cooperating to identify mutual commercial and 

strategic opportunities with respect to cargo services; (2) cooperating in determining distribution 

 

35 Restated JBA § 5.3.2.

36 Restated JBA § 5.4.2.

37 Restated JBA § 5.7.1.

38 Restated JBA § 5.5.1.

39 Restated JBA § 3.6.

40 Alliance Agreement § 1(A).
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strategies, including Internet and GDS distribution; (3) cooperating in travel agency and GSA 

commission levels and override and incentive programs; (4) harmonizing service and product 

standards in order to provide a seamless product to passengers; (5) reducing costs and 

redundancies through coordinated or joint acquisition of goods and services from third party 

suppliers and vendors or through acquisition of goods and services from each other or from 

Affiliates; (6) harmonizing IT systems; and (7) cooperating on the methodology for the 

settlement of revenue and costs from certain codeshare flights and other flights, including, if 

mutually agreed, the settlement of revenue and costs on selected routes and optimizing pricing 

opportunities.

41

C. The Proposed Alliance Continues and Expands the Customer Benefits of the 

Original JBA

The Proposed Alliance promises to deliver a host of additional benefits on top of what 

has been achieved by the Parties‘ existing arrangement by expanding the scope and scale of their 

collaboration.

New Services and More Choices for Passengers. In response to passenger demand for 

the Parties‘ complementary networks, the Parties intend to launch a new joint business service on 

American‘s state-of-the-art Boeing 777-3000 aircraft between Los Angeles and Sydney in

December 2015. The Parties anticipate that American‘s service will facilitate a 20% increase in 

the number of LAX-SYD flights per week, and a 12% weekly increase in seats on that route. 

At the same time, the launch of American‘s LAX-SYD service will enable Qantas to 

expand its Trans-Pacific network to encompass the currently under-served route between San 

Francisco and Sydney. Together with American‘s new LAX-SYD route, the Parties anticipate 

 

41 Alliance Agreement § 1(B).
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an estimated increase in weekly seat capacity of 49% on joint business flights between Sydney 

and the U.S. West Coast.

Both American‘s new LAX-SYD service and Qantas‘ new SFO-SYD service will deliver 

improved connectivity and increased schedule choice for passengers flying from points within 

the U.S., Canada, and Mexico to Australia and New Zealand. Customers will benefit from 

aligned schedules and increased frequencies, with American operating LAX-SYD service using 

its Boeing 777-300 aircraft which offers a premium customer experience, while Qantas continues 

to operate flights on that route.

In keeping with the Parties‘ commitment to ―explore and pursue new growth 

opportunities,‖

42 the Parties are also committed to launching several additional new services 

under evaluation, which would create new customer benefits and fuel investment and expansion 

of the Joint Business. These new services are likely to include routes not currently served by 

either of the Parties and are only made possible in the context of the Proposed Alliance.

Enhanced Inter-Alliance Competition. The Proposed Alliance will create a superior 

product for passengers and allow American and Qantas to compete more effectively with Delta 

(SkyTeam)-Virgin Australia and United-Air New Zealand (Star). New service from San 

Francisco to Australia will introduce fresh competition to a route where only United currently 

provides non-stop service. And the addition of a new American-operated flight on LAX-SYD

will add a new product and new capacity for passengers, and generate publicity and excitement 

while enhancing competition. And, importantly, as noted above, the Parties are studying the 

launch of additional new joint business routes currently served only by other carriers.

 

42 Restated JBA § 3.2.2.
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Improved Fare Options. The Proposed Alliance will enable greater availability and 

variety of price points for customers through reciprocal inventory access and management. By 

eliminating double-marginalization, the Parties will enjoy greater efficiencies that will lower 

costs and allow them to offer a more competitive product.43 Likewise, the new agreement will 

facilitate schedule optimization as additional American-operated Trans-Pacific services are 

introduced.

Substantial Frequent Flyer Benefits. The Proposed Alliance will ensure that 

passengers continue to enjoy fully reciprocal and comprehensive benefits on both airlines‘ 

frequent flyer programs, particularly through earning and redemption opportunities as well as onboard recognition for each airline‘s frequent flyer members (including those travelling on 

American‘s new services to and from Australia).44 The Restated JBA also contains 

commitments to provide FFP members of each program with more access to offers, incentives 

and promotions from the other party.

45

Enhanced Airport Services and Customer Experience. The Proposed Alliance

reinforces the Parties‘ strong commitment to customer service by requiring the Parties to 

undertake efforts to achieve customer satisfaction, including by focusing on passenger comfort, 

 

43 See Delta-Virgin Atlantic-Air France/KLM-Alitalia Show Cause Order 2013-8-21, at 16 (Aug. 

30, 2013) (―As the Department has noted in the past, the economic incentives of non-immunized 

codesharing encourage each carrier to maximize its own profit without regard to the financial 

position of the other carrier. In an immunized joint venture, both carriers become indifferent as 

to which carrier operates the flight, focusing instead on maximizing traffic flows across 

combined networks. This dynamic may eliminate double marginalization pricing and other 

inefficiencies that burden consumers.‖); see also Delta-Virgin Australia ACCC Draft 

Determination and Interim Authorisation, at 23 (―The ACCC considers the removal of double 

marginalisation under the Alliance is a benefit to the Applicants‘ passengers, and should lead to 

lower prices for journeys connecting separate services operated by each of the Applicants...the 

removal of double marginalisation is likely to result in some public benefit.‖).

44 Restated JBA § 6.1.

45 Restated JBA § 6.1.2.
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ground experience, entertainment, catering, crew, reservations, ticket counter efficiency, 

boarding efficiency, lounges, baggage delivery, and punctuality.

46

 For example, the Parties 

intend to progress with plans to make ground handling improvements such as investing in

dedicated  ̳bag runners‘ during evening departure times in LAX to enable otherwise late transfer 

bags to be taken between terminals and reduce the frequency of ―missed‖ baggage. The Parties 

also contemplate pursuing additional efficiencies through new co-location initiatives designed to 

enhance the customer experience, including the possibility of moving American and Qantas 

flights to the same terminal at JFK and introducing a joint lounge at DFW. The Proposed 

Alliance will also facilitate expanding reciprocal lounge access for club members of both 

airlines.

More Efficient Utilization of Aircraft Equipment. Through the Proposed Alliance, the 

Parties plan to allocate aircraft to better match demand and potentially further increase capacity 

on existing Trans-Pacific routes through improved fleet choice and increased frequencies on 

certain routes. The Restated JBA also requires the parties to coordinate on flight schedules and 

develop a joint network plan.47

Seamless Integration with US Airways. Following the Merger between American and 

US Airways in 2013, passengers traveling from Australia gained access to an even broader 

domestic U.S. network, especially connecting US Airways hubs in Phoenix Charlotte, and 

Washington D.C. to Qantas gateways. The Proposed Alliance will also allow Qantas passengers 

expanded access to lounges in US Airways hubs where there was previously no American or 

Qantas lounge. Looking forward, once American completes its integration of reservations 

 

46 Restated JBA § 3.6.

47 Restated JBA § 3.1.
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systems with US Airways, as is expected to occur later this year, and all flights of the combined 

carrier are displayed under the AA code, the Parties expect to add additional routes to the 

Codeshare Agreement, including flights between Los Angeles and Charlotte, Columbus, 

Philadelphia, Pittsburgh, and Raleigh-Durham.

Strengthened Economic Ties between the U.S. and Australia. By encouraging crossmarketing initiatives and encouraging increased travel between the U.S. and Australia, the 

Restated JBA will have a positive impact on U.S. tourism and U.S. businesses. It will also help 

expedite the growth of American in Australia, leading to further employment in Australia and 

other economic benefits. 

Neither carrier, acting alone, could achieve all the benefits that are expected from the 

continued and evolving collaboration between the Parties.

IV. The Proposed Alliance Easily Meets the Department’s Legal Standards for 

Granting Approval and Antitrust Immunity

The Parties‘ Application easily satisfies the Department‘s standards and therefore 

warrants approval and antitrust immunity.48

A. The Department has Articulated Clear Standards of Review for Approval and 

Antitrust Immunity Applications

The Department employs a two-step process to review alliance agreements. First, under 

49 U.S.C. § 41309, the Department must determine that an inter-carrier agreement is not adverse 

 

48 As noted above, the Department determined that there was no need to grant antitrust immunity 

for the Original JBA in 2011 because the Parties had no overlapping routes and American lacked 

the ability to operate its own Trans-Pacific service. Now that those constraints have been lifted, 

the Parties seek antitrust immunity to enable increased coordination and activities that are a 

natural evolution of the Original JBA. Absent the grant of antitrust immunity, the risk to the 

Parties once they become competitors would be too great to warrant close cooperation.
American-Qantas 

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to the public interest and not in violation of the statute before granting approval.49 The 

Department cannot approve an inter-carrier agreement that substantially reduces or eliminates 

competition unless the agreement is necessary to meet a serious transportation need or to achieve 

important public benefits.50 Second, after approving an agreement pursuant to § 41309(b), the 

Department has the discretion under 49 U.S.C. § 41308(b), to exempt a legal person from the

antitrust laws ―to the extent necessary to allow the person to proceed with the transaction,‖ 

provided that the Department determines that the exemption is required by the public interest.

Accordingly, the Department‘s established policy is to approve and grant immunity for 

inter-carrier agreements if: (1) the agreements do not eliminate or substantially reduce 

competition and are not adverse to the public interest; and (2) a grant of immunity is required by 

the public interest and for the parties to proceed with the transaction.51 The Department‘s tests 

for both approval and antitrust immunity are satisfied here.

B. The Proposed Alliance Should Be Approved Because It Promotes the Public 

Interest by Providing Important Public Benefits without Substantially Reducing 

Competition in any Relevant Market

1. The Proposed Alliance does not reduce competition in any relevant market

In evaluating the competitive impact of alliance applications, the Department applies the 

Clayton Act ―substantial lessening of competition‖ test to predict the competitive effects of a 

proposed alliance.

52 This test considers ―whether the alliance would significantly increase 

concentration in relevant markets, whether the alliance raises concerns about potential 

anticompetitive effects in light of other factors, and whether entry into the market would be 

 

49 § 41309(b).

50 § 41309(b)(1)(A) and (B).

51 oneworld Tran-Atlantic JB Case Final Order 2010-7-8, at 8 (July 20, 2010).

52 Star Alliance Show Cause Order 2009-4-5, at 7 (April 7, 2009).
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timely, likely, and sufficient either to deter or counteract a proposed alliance‘s potential for 

harm.‖53

This Application is unusual in that there is no existing competition between the Parties on 

either a country-pair or city-pair level. American has not offered any Trans-Pacific service on its 

own metal to either Australia or New Zealand in more than twenty years as a result of fleet 

limitations and restrictions in its labor agreements. As the Parties‘ networks are currently 

entirely complementary, the Proposed Alliance will not eliminate or substantially reduce any 

actual competition in Trans-Pacific services. The Department has previously recognized that 

there are ―no significant competitive issue[s]‖ when two carriers ―are not operating competitive 

services in the relevant...market.‖54 For the same reason, the Proposed Alliance cannot increase 

concentration in any relevant market.55 Accordingly, the Proposed Alliance will not 

substantially reduce or eliminate competition. 

2. The Proposed Alliance will achieve important public benefits, including by 

expanding competition in the highly-competitive Trans-Pacific marketplace

As detailed above, the Proposed Alliance promises to deliver a number of important 

public benefits. But in addition to the benefits detailed there, the Proposed Alliance will also

increase competition by adding more options and greater capacity on Trans-Pacific routes as 

American and Qantas expand and launch new services. Under the Proposed Alliance, the Parties 

intend to introduce new service onto the highly-competitive LAX-SYD route while providing a 

second, new option for customers traveling on the underserved SFO-SYD route.

 

53 Id.

54 America West-Royal Jordanian Final Order 2005-1-23, at 8-9 (Jan. 27, 2005); see also id. at 9 

(―the Cooperation Agreement should not diminish competition in the U.S.-Middle East market‖ 

because ―the Joint Applicants do not compete in any U.S.–Middle East market.‖).

55 See id. at 10 (recognizing that the ―proposed . . . alliance will not increase concentration 

because [one of the applicants] does not operate its own flights to the [region]‖).
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LAX-SYD is the single most trafficked route between the U.S. and Australia, and Qantas 

currently faces robust competition from Delta, Virgin, and United. On the LAX-SYD route, 

Qantas, United, Virgin Australia, and Delta have consistently held at least a 15% share seat 

capacity.56 As a result, members of all three major alliances currently offer LAX-SYD service.

Under the Proposed Alliance, Qantas will continue to operate flights between Los 

Angeles and Sydney, while American will launch its own service on American metal. In total, 

the Parties anticipate that the Proposed Alliance will add three flights per week between the 

cities, a 20% increase, and increase available weekly seats for customers by 12%. In short, the 

Proposed Alliance will increase competition by giving passengers even more choice on a route 

already enjoying robust competition from other carriers—and passengers will reap the benefits. 

Likewise, under the Proposed Alliance, Qantas intends to launch a new non-stop service 

on the underserved SFO-SYD route. Since 2012, United has been the only carrier to fly non-stop 

between SFO-SYD, carrying a total of 189,169 passengers in 2014. Qantas‘ entry will 

immediately introduce new capacity and fresh competition by adding a second non-stop carrier 

on that route with six flights per week. As with American‘s new LAX-SYD service, passengers 

will benefit from increased choice, expanded connectivity, and the host of other benefits 

described in Section III above. In total, the Parties anticipate that this new service under the 

Proposed Alliance will expand seat capacity on joint business flights between SYD and the U.S. 

West Coast by ~49%. And the Parties are currently evaluating more new route options under the 

Proposed Alliance.

These new services will add to the robust competition that already characterizes the 

Trans-Pacific marketplace and allow the Parties to better compete with new offerings by Delta-

 

56 See Exhibit 15, LAX-SYD Seat Capacity Share by Carrier
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Virgin Australia, and United. In October 2014, United launched new service on LAX-MEL that 

has since increased to daily service.57 Also in 2014, United replaced its Boeing 747 flights on 

LAX-SYD and SFO-SYD with Boeing 777s.58 Meanwhile, Delta and Virgin Australia have 

continued to upgrade their capacity on Trans-Pacific routes while enjoying an alliance that likely 

helped ―attract[] and retain[] corporate customers on the Trans-Pacific, including customers that 

may otherwise have signed with Qantas.‖59 Indeed, the Department approved the Delta-Virgin 

Australia alliance in part because it found that the ―immunized alliance . . . is unlikely to have 

any significant deleterious effect on competition in the U.S.-Australia market,‖60 because

competition ―in the U.S.-Australia and U.S.-South Pacific is now more robust than ever.‖61

Given the competitive vigor on Trans-Pacific routes between ―three carrier groups, each with its 

own alliance,‖ the Department concluded that all competitors would ―continue to operate in a 

competitive environment that benefits the...public.‖62

New service introduced as a result of the Proposed Alliance will also likely provoke 

competitive fares and new service offerings from rival airlines and alliances. Indeed, in Delta 

and Virgin Australia‘s recent application to the ACCC to renew their alliance, the ACCC 

observed that ―Qantas represents a major consideration for the [Delta-Virgin Australia] Alliance 

in formulating its competitive strategy.‖63 Accordingly, American and Qantas expect swift 

reactions from competitors, particularly from the Delta-Virgin and United-Air New Zealand 

alliances, who will fight to compete with the Parties‘ new services and wider network. In the 

 

57 Delta-Virgin Australia ACCC Draft Determination and Interim Authorisation, at 44.

58 Id.

59 Id. at 6, 27.

60 Delta-Virgin Blue Group Final Order 2011-6-9, at 2 (June 10, 2011). 

61 Id. at 4.

62 Id. at 2-3.

63 Delta-Virgin Australia ACCC Draft Determination and Interim Authorisation, at 39.
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immediate wake of the ACCC‘s draft authorization to reauthorize the Delta-Virgin Australia 

alliance, United Airlines‘ Managing Director for Japan and Pacific Sales reiterated the 

―significant importance‖ of the Australian market to United, and that remaining competitive on 

Trans-Pacific routes is ―absolutely paramount for us... .‖64 The expected reactions from the 

Parties‘ competitors will result in more efficient, better quality and lower prices services for 

customers flying Trans-Pacific routes.

In sum, the Proposed Alliance will allow American and Qantas to compete aggressively 

and effectively with the immunized Delta (SkyTeam)-Virgin Australia and United-Air New 

Zealand (Star) alliances, and provide a range of public benefits without substantially reducing 

competition in any relevant market. The Proposed Alliance promotes, and is no way adverse to 

the public interest.

C. The Public Interest Requires a Grant of Antitrust Immunity and the Parties Will 

Not Proceed With the Proposed Alliance Without Antitrust Immunity 

1. The Parties will not proceed with the Proposed Alliance without the 

Department’s grant of antitrust immunity

The Original JBA between American and Qantas became effective on May 6, 2011, 

shortly after receiving final approvals from the Department of Transportation, the ACCC, and

the NZMOT. Since that relationship began, the Parties have seen the public benefits envisioned 

in their initial application come to fruition.65 However, the Original JBA has enabled the Parties 

to realize only a portion of the untapped potential of a more comprehensive relationship between 

American and Qantas as contemplated by the Proposed Alliance. The Proposed Alliance 

represents a truly metal-neutral joint business between the Parties where both share in the 

 

64 The Australian,  ̳United lifts in a battle for the Pacific,‘ 5 June 2015.

65 See Section II above.
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economic risk of the collaboration and share in the success of the enterprise regardless of which 

carrier is operating the Trans-Pacific segment. The added alignment of incentives will drive 

American and Qantas to further integrate their networks, thus delivering to passengers the 

benefits of greater cooperation.

All of the existing cooperation and future expansion plans assume access to the flow 

accumulated at the other carrier‘s respective gateways. Without tight integration of the Proposed 

Alliance, American and Qantas would not have the same incentives to allow each broad access to 

the other‘s network.

With the tight integration of the Proposed Alliance, the oneworld alliance will be able to 

compete on equal footing with Delta (SkyTeam)-Virgin Australia and United-Air New Zealand 

(Star), who already enjoy immunized Trans-Pacific alliances. As the Department has observed 

in the past, close integration in an alliance enables parties to ―achieve merger-like-efficiencies 

and deliver benefits that would not otherwise be possible.‖66 Virgin and Delta highlighted the 

importance of alliance integration in the Trans-Pacific, stating that it ―facilitates services which 

Virgin Australia and Delta would not alone be able to offer either in the short term, or at all. As 

the integration and benefits of the Alliance deepen, new . . . routes are also more likely to 

become viable.‖67 Each of these statements applies equally to the present Application.

The ultra-long stage length and limited number of available Trans-Pacific gateways 

require close collaboration and integration to efficiently and effectively serve these routes. The 

other two Trans-Pacific alliances coordinate closely, align their operations, and continue 

improving the Trans-Pacific services they provide. Star Alliance grew its passenger traffic on 

 

66 SkyTeam II Case Show Cause Order 2008-4-17, at 15 (April 9, 2008).

67 Alliance between Virgin Australia and Delta Airlines, ACCC Submission in support of 

application for revocation and substitution, 30 December 2014, p 24.
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U.S. to Australia-New Zealand routes by over 115,000 from 2010 to 2014, a 2.5% compound 

annual growth rate.68 Likewise, the Delta (SkyTeam)-Virgin Australia alliance saw total 

increases of over 80,000 passengers on U.S. to Australia-New Zealand routes since 2010, a 3.7% 

CAGR. The Parties seek to achieve similar pro-competitive efficiencies through the Proposed 

Alliance.

While the Parties lawfully engage in close cooperation under the Original JBA, they have 

determined that they will not proceed with the implementation of the Proposed Alliance without 

a grant of immunity. Even though the Proposed Alliance will allow American and Qantas to 

enhance competition, provide a range of benefits to customers, and generally achieve mergertype efficiencies, there still remains a significant risk of antitrust lawsuits from third parties, 

however unwarranted, particularly once both Parties are operating U.S. to Australia service.69 

The persistent threat of this expensive and burdensome antitrust litigation is a weight that the 

Parties have determined is too great for the joint business to sustain absent a grant of immunity. 

The Department has previously acknowledged the importance of antitrust immunity in this 

context, noting that the commercial agreements fostering the close integration that generate

 

68 See Exhibit 16: Passenger Traffic on U.S. to AU/NZ by Alliance.

69 Airlines have had to defend themselves in multiple lawsuits driven by plaintiffs‘ counsel 

involving antitrust claims, regardless of the lack of merit. See, e.g., Taleff v. Sw. Airlines Co., 

554 F. App‘x 598 (9th Cir.) (issuing sanctions order against plaintiffs‘ attorneys), cert. denied,

135 S. Ct. 231 (2014); Fjord v. AMR Corp et al, U.S. Supreme Court, Docket No. 11-15463-

SHL (Plaintiffs‘ emergency request for stay of orders approving American-US Airways merger 

denied by the Bankruptcy Court of the U.S. District Court of S.D.N.Y, the Second Circuit Court 

of Appeals, and finally the U.S. Supreme Court); Malaney v. UAL Corp., 552 F. App‘x 698, 700-

01 (9th Cir.) (upholding lower court‘s denial of plaintiffs‘ motion for injunction to prevent 

merger of United Airlines Inc. and Continental Airlines Inc.), cert. denied, 135 S. Ct. 136 (2014); 

In re Northwest Airlines Corp. Antitrust Litig., 208 F.R.D. 174 (E.D. Mich. 2002), review 

denied, 310 F.3d 953 (6th Cir. 2002), cert. denied, 539 U.S. 904 (2003); In re Airline Ticket 

Commission Antitrust Litig., 268 F.3d 619 (8th Cir. 2001).
American-Qantas 

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substantial public benefits ―involve revenue and benefit-sharing arrangements that create a 

greater risk of antitrust litigation and potential antitrust liability.‖70

2. The substantial public benefits of the Proposed Alliance cannot be 

realized without a grant of antitrust immunity

The Department has accepted that most of the pro-competitive customer benefits of such 

collaborations require close integration and that ―a grant of antitrust immunity is . . . necessary to 

achieve most of these benefits.‖71 The same is true here. Without the protection of antitrust 

immunity for the Parties‘ efforts to coordinate on capacity, scheduling, information sharing, or 

otherwise engaging in their joint business, the Parties will not be able to expand on the benefits 

achieved through the Original JBA. Moreover, the inability to obtain immunity would create a 

moat between the Parties and provide a clear signal that would profoundly impact the launch of 

new services and joint programs along the Trans-Pacific.

The services and benefits of the Proposed Alliance are achievable by the Parties only in 

the context of immunized coordination. Only without fear of private antitrust actions, however 

meritless, can American and Qantas comfortably undertake the Proposed Alliance and continue 

the joint business sustainably. The public interest requires the grant of antitrust immunity to the 

Proposed Alliance, just as it required immunity for the Delta (SkyTeam)-Virgin Australia and 

United-Air New Zealand (Star) alliances.

 

70 United-Lufthansa-SAS-Austrian-bmi-LOT-Swiss-TAP-Air Canada Show Cause Order 2006-

12-17, at 17 (Dec. 19, 2006).

71 oneworld Trans-Atlantic JB Case Show Cause Order 2010-2-8, at 30 (Feb. 13, 2010).
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V. Conclusion

The Proposed Alliance firmly meets all the Department‘s requirements for approval and a 

grant of antitrust immunity under 49 U.S.C. §§ 41308 and 41309. First, the Proposed Alliance is 

firmly in the public interest, as it would (1) enhance the already-robust airline competition

between North America and Australia/New Zealand; and (2) generate important public benefits 

to customers that could not be achieved without the merger-type efficiencies arising from an 

immunized alliance akin to those already enjoyed by the Delta (SkyTeam)-Virgin Australia and 

United-Air New Zealand (Star) alliances. Second, as the Department has acknowledged in prior 

grants of immunity, antitrust immunity is necessary for the Parties to (1) achieve the full, procompetitive range of public benefits that would arise from the Proposed Alliance; and (2) 

proceed with the Proposed Alliance without the risk of meritless antitrust litigation.


Exhibit 1: Alliance Agreement
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
American-Qantas Joint Application Exhibit 1
Exhibit 2: Restated JBA, Alliance Settlement Agreement, Amendment No. 5 to the Original 

JBA, and Codeshare Agreement

Exhibit 2 is being provided as part of the Parties‘ Confidential Production Pursuant to the Motion 

of Joint Applicants for Confidential Treatment
Exhibit 3: Summary of Material Terms of the Restated JBA 

Joint 

Business

Scope

 Covers services of the parties and their affiliates flying non-stop between North America 

(including Puerto Rico and the U.S. Virgin Islands but excluding Hawaii, Guam and other 

U.S. territories) and Australia/New Zealand (“Joint Services”)

 Intended to cover new joint business routes introduced by American and Qantas that are 

currently being evaluated

Revenue and 

Cost 

Settlement

 Metal-neutral revenue and cost settlement as set out in the Alliance Settlement 

Agreement

Joint 

Business

Management

 Management Committee consisting of two representatives of each party meeting at least 

quarterly, with decisions only by unanimous vote

 Steering Committee consisting of no more than two representatives of each party meeting 

at least twice per year, with decisions only by unanimous vote

 Functional Committees overseeing (1) revenue management and pricing; (2) network 

planning and schedule management; (3) sales; (4) reservations and online distribution; (5) 

marketing, customer experience and product, including frequent flyer programs; (6) 

airports; (7) finance and accounting; (8) procurement and cost reduction; (9) IT and other 

infrastructure; (10) legal/regulatory matters; and (11) quality assurance

 Consensus decision-making for network and capacity decisions relative to the Joint 

Services with certain limited exceptions

Capacity 

Governance

 The intent is for the parties to explore and pursue new growth opportunities and mutually 

agree on new routes and added capacity pursuant to a rolling five-year network plan

 First two years of the rolling network plan are considered fixed after approval by the 

Steering Committee, and any changes to the plan require consent

 Last three years of the rolling network plan are for planning purposes only 

Financial

Settlement

 Settlement of Joint Business net revenue attributable to consensual capacity in 

accordance with the parties’ relative capacity proportions subject to adjustments for net 

revenue resulting from certain Trans-pacific routes, and equal sharing of Joint Business 

net revenue attributable to non-consensual excess capacity

Exclusivity

 Qantas to be American’s exclusive (a) airline partner in the Australian Region with regard 

to codesharing and frequent flyer arrangements; (b) partner with respect to codesharing 

on flights to, from, via or within the Australian Region; and (c) lessor or benefit sharing 

partner with regard to direct flights between the Australian Region and North America, in 

each case except for certain grandfathered arrangements, legacy arrangements of new 

affiliates, arrangements with other oneworld carriers and arrangements imposed by 

governmental authorities

 American to be Qantas’ exclusive (a) North American airline partner with regard to 

codesharing and frequent flyer arrangements; (b) partner with respect to codesharing on 

flights to, from, via or within North America; and (c) lessor or benefit sharing partner with 

regard to direct flights between the Australian Region and North America, in each case 

except for certain grandfathered arrangements, legacy arrangements of new affiliates, 

arrangements with other oneworld carriers and arrangements imposed by governmental 

authorities

Term

 Initial term of ten years from the date the parties receive notice that the Australian and US 

authorities have granted antitrust immunity; terminable if antitrust immunity is not granted 

or renewed
Exhibit 4: American-Qantas Final Order 2011-11-12 (Nov. 9, 2011)
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.

American-Qantas Joint Application Exhibit 4
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). 

American-Qantas Joint Application Exhibit 4
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.

American-Qantas Joint Application Exhibit 4
4 

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. 

American-Qantas Joint Application Exhibit 4
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.

American-Qantas Joint Application Exhibit 4
Exhibit 5: ACCC Determination of Applications for Authorisation by Qantas Airways 

Limited & American Airlines Inc., 29 September 2011
American-Qantas Joint Application Exhibit 5
DETERMINATION ii A91265 & A91266 

Summary 

The ACCC grants authorisation for a Joint Business Agreement between Qantas and American 

Airlines until 21 October 2016. 

On 12 May 2011, Qantas and American Airlines lodged applications for authorisation of a Joint 

Business Agreement (JBA). Under the JBA, the airlines will coordinate operations on services 

between Australia/New Zealand and the United States (the trans-Pacific routes), and on their 

respective services which support the trans-Pacific routes. 

The applicants propose to coordinate all business operations, including flying operations, pricing 

and revenue management, scheduling, cargo, passenger sales and marketing, airport services and 

frequent flyer programs. 

The ACCC considers that the JBA is likely to result in new and improved products and services, 

(including improved schedules and connectivity, a greater choice of connection and stop-over 

options, and the possibility of new and improved routes) and enhanced value added services 

(including reciprocal lounge access, equivalent frequent flyer privileges and improved check-in 

procedures). The ACCC also considers that the JBA will provide the applicants with an 

incentive to offer new fare products, which may result in lower fares on many trans-Pacific 

routes. 

Qantas and American Airlines do not directly compete on any routes, and the information 

currently available suggests that they are unlikely to directly compete in the future. In light 

of this, the ACCC considers that the JBA is unlikely to result in any public detriment. 

Therefore, the ACCC grants authorisation to the applicants for the JBA for five years. 

On 9 June 2011, the ACCC granted interim authorisation, allowing the parties to 

commence the JBA while it considers the substantive applications for authorisation. 

American-Qantas Joint Application Exhibit 5
DETERMINATION iii A91265 & A91266 

Contents

1. THE APPLICATIONS FOR AUTHORISATION................................................. 1

2. BACKGROUND TO THE APPLICATION ............................................................. 3

THE APPLICANTS........................................................................................................................ 3 

Qantas.................................................................................................................................. 3 

American Airlines............................................................................................................. 3 

THE JBA..................................................................................................................................... 4 

THE AVIATION INDUSTRY .......................................................................................................... 6 

3. SUBMISSIONS RECEIVED BY THE ACCC ........................................................ 8

4. ACCC EVALUATION ................................................................................................... 10

THE MARKET............................................................................................................................. 10 

THE COUNTERFACTUAL............................................................................................................ 14 

PUBLIC BENEFIT....................................................................................................................... 15 

New and improved products and services........................................................... 15 

New fare products and lower fares......................................................................... 17 

Increased tourism ......................................................................................................... 21 

Streamlined corporate travel procurement......................................................... 22 

A stronger frequent flyer proposition .................................................................... 22 

ACCC conclusion on public benefits ....................................................................... 23 

PUBLIC DETRIMENT.................................................................................................................. 23 

International air passenger transport services.................................................. 23 

International air freight transport services ......................................................... 24 

The sale of air transport services............................................................................ 24 

Australian domestic air passenger transport services .................................... 25 

ACCC conclusion on public detriments.................................................................. 25 

BALANCE OF PUBLIC BENEFIT AND DETRIMENT ..................................................................... 25 

LENGTH OF AUTHORISATION................................................................................................... 26 

VARIATIONS TO THE JBA ....................................................................................................... 26 

5. DETERMINATION....................................................................................................... 27

THE APPLICATION .................................................................................................................... 27 

THE NET PUBLIC BENEFIT TEST............................................................................................... 27 

CONDUCT FOR WHICH THE ACCC GRANTS AUTHORISATION............................................... 28 

INTERIM AUTHORISATION ....................................................................................................... 28 

DATE AUTHORISATION COMES INTO EFFECT ......................................................................... 28 

ATTACHMENT A — THE AUTHORISATION PROCESS .............................................................. 29 

ATTACHMENT B — CHRONOLOGY OF ACCC ASSESSMENT FOR APPLICATIONS A91265 &

A91266 .................................................................................................................................. 30 

ATTACHMENT C — THE TESTS FOR AUTHORISATION AND OTHER RELEVANT PROVISIONS 

OF THE ACT .............................................................................................................................. 31 

American-Qantas Joint Application Exhibit 5
DETERMINATION iv A91265 & A91266 

List of abbreviations 

ACCC Australian Competition and Consumer Commission

The Act The Competition and Consumer Act 2010 

The applicants Qantas Airways Limited & American Airlines Inc. 

Codeshare 

 

 

The applicants’ 

Codeshare 

Agreement 

Code sharing refers to arrangements involving the assignment 

of one airline’s designator code to a flight operated by another 

airline. 

The applicants currently sell tickets on each others’ services 

under a free-sale Codeshare Agreement dated 23 September 

2004. 

Free sale A type of code share where the marketing carrier effectively 

only pays for the seats it sells 

Interline agreement Interlining involves the carriage of passengers and/or freight 

between two points using more than one airline under an 

arrangement which typically involves baggage check through 

and the honouring of tickets between airlines 

Load factor Load factors measure the percentage of seats filled on an 

aircraft on any given route. This is derived from dividing the 

number of passengers travelled by the number of seats 

available 

Sector A sector is a non-stop flight leg between two points 

(excluding technical stops where no passengers or cargo are 

picked up or dropped off) 

The Tribunal The Australian Competition Tribunal 

American-Qantas Joint Application Exhibit 5
DETERMINATION 1 A91265 & A91266 

1. The applications for authorisation 

1.1. On 12 May 2011, Qantas Airways Limited (Qantas) & American Airlines Inc. 

(American Airlines) (together, the applicants) lodged applications for authorisation 

A91265 & A91266 with the ACCC. 

1.2. Authorisation is a transparent process where the ACCC may grant immunity from legal 

action for conduct that might otherwise breach the Competition and Consumer Act 

2010 (the Act). The ACCC may ‘authorise’ businesses to engage in anti-competitive 

conduct where it is satisfied that the public benefit from the conduct outweighs any 

public detriment. The ACCC conducts a public consultation process when it receives 

an application for authorisation, inviting interested parties to lodge submissions 

outlining whether they support the application or not. Further information about the 

authorisation process is contained in Attachment A. A chronology of the significant 

dates in the ACCC’s consideration of these applications is contained in Attachment B. 

1.3. Application A91265 was made under subsections 88(1) and 88(1A) of the Act to: 

 make and give effect to a contract, arrangement or understanding, a provision of 

which is or may be an exclusionary provision within the meaning of section 45 of 

the Act 

 make and give effect to a provision of a contact, arrangement or understanding, a 

provision of which is, or may be, a cartel provision and which is also, or may also 

be, an exclusionary provision within the meaning of section 45 of that Act. 

1.4. Application A91266 was made under subsections 88(1) and 88(1A) of the Act to: 

 make and give effect to a contract or arrangement, or arrive at an understanding, a 

provision of which would have the purpose, or would have or might have the 

effect, of substantially lessening competition within the meaning of section 45 of 

the Act 

 make and give effect to a contract or arrangement, or arrive at an understanding a 

provision of which would be, or might be, a cartel provision (other than a provision 

which would also be, or might also be, an exclusionary provision within the 

meaning of section 45 of that Act). 

1.5. In particular, Qantas and American Airlines have sought authorisation to make and give 

effect to a Joint Business Agreement (JBA). Under the JBA, they would coordinate 

operations on international air passenger transport services between Australia/New 

Zealand and the United States (the trans-Pacific routes), and on extensive Qantas and 

American Airlines services which support the trans-Pacific routes. The applicants have 

sought authorisation for five years. 

1.6. Qantas will operate trans-Pacific services and connecting services in Australia and to 

New Zealand on behalf of the proposed JBA. American Airlines will operate 

connecting services in the United States, Canada and Mexico, and provide sales support 

for the trans-Pacific routes. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 2 A91265 & A91266 

Interim authorisation 

1.7. On 9 June 2011, the ACCC granted interim authorisation to allow the parties to 

commence the proposed JBA while the ACCC considers the substantive authorisation. 

Interim authorisation will remain in place until the ACCC’s final determination comes 

into effect or until the ACCC decides to revoke interim authorisation. 

Draft determination 

1.8. Section 90A(1) requires that before determining an application for authorisation the 

ACCC shall prepare a draft determination. 

1.9. On 22 August 2011, the ACCC issued a draft determination proposing to grant 

authorisation to Qantas and American Airlines for five years. 

1.10. A conference was not requested in relation to the draft determination. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 3 A91265 & A91266 

2. Background to the application 

The applicants 

Qantas1

2.1. Qantas was incorporated in Queensland in 1920 and is Australia's largest domestic and 

international airline. The Qantas Group employs approximately 32,500 people and 

offers services across a network covering 182 destinations in 44 countries - 59 in 

Australia and 123 in other countries (including those covered by code share partners). 

2.2. As at 1 September 2010, Qantas operated a fleet of 252 aircraft. Qantas also operates 

airline related businesses which include airport support services, catering, freight 

operations, loyalty programs, defence support services and engineering. 

2.3. Qantas operates flights using the following brands:

 Qantas: a full-service airline offering domestic and international services 

 Jetstar: a low fare airline offering domestic and international services 

 QantasLink: a full-service regional domestic airline. 

2.4. Qantas also has interests in Jetstar Asia and Valuair (both Singapore-based airlines, of 

which Qantas owns 49%), Jetstar Pacific (a Vietnam-based airline of which Qantas 

owns 27%) and Air Pacific (a Fiji based airline of which Qantas owns 46%). 

2.5. Domestically, Qantas (including QantasLink and Jetstar) operates over 5,600 flights 

each week. These flights serve 59 city and regional destinations in all states and 

mainland territories. Internationally, Qantas (including Jetstar) operates more than 970 

flights each week, of which approximately 630 are Qantas flights and 340 are Jetstar 

flights. 

2.6. For the financial year ended 30 June 2010, Qantas reported revenue of A$13.8 billion 

and a profit before tax of A$178 million. 

American Airlines2

2.7. American Airlines, the principal subsidiary of AMR Corporation, was founded in 1934. 

As at 31 December 2010, American Airlines provided services to approximately 160 

destinations throughout North America, the Caribbean, Latin America, Europe and 

Asia. The majority of American Airlines flights operate to or from five major United 

 

1

 The majority of information under this sub-heading is sourced from: 

- Qantas and American Airlines, Submission in support of applications for authorisation, 11 May 2011 

- Qantas, Annual report 2010

2

 The majority of information under this sub-heading is sourced from: 

- Qantas and American Airlines, Submission in support of applications for authorisation, 11 May 2011 

- AMR Corporation, Annual report 2010.

American-Qantas Joint Application Exhibit 5
DETERMINATION 4 A91265 & A91266 

States cities: Dallas/Fort Worth, Chicago O’Hare, Miami, New York City and Los 

Angeles. 

2.8. AMR Eagle Holding Corporation is a wholly owned subsidiary of AMR Corporation 

and owns two airlines, American Eagle Airline, Inc. and Executive Airlines, Inc, 

collectively known as American Eagle. Established in 1984, American Eagle is 

American Airlines’ regional affiliate. As at 31 December 2010, American Eagle 

operated approximately 1,500 daily departures serving over 175 destinations in North 

America, Mexico and the Caribbean. 

2.9. American Airlines also operates airline related businesses: 

 AAdvantage: a travel awards/frequent flyer program 

 AA Vacations: a holiday business offering flights, accommodation, ground 

transportation and activities 

 American Airlines Cargo: providing cargo capacity to major cities in the United 

States, Europe, Canada, Mexico, the Caribbean, Latin America and Asia using the 

cargo holds of its passenger fleet. 

2.10. For the 2010 financial year (to December), American Airlines reported revenue of 

US$22.2 billion and a loss before tax of US$506 million. 

The applicants’ other alliances 

2.11. Both Qantas and American Airlines are part of the oneworld marketing alliance, which 

links the networks of its member airlines to facilitate global passenger travel, and also 

links the members’ frequent flyer programs and access to lounge facilities. Other 

members include British Airways, Cathay Pacific, Finnair, LAN Airlines, Iberia, Japan 

Airlines (JAL), Malev Hungarian Airlines, Mexicana, Royal Jordanian and S7 Airlines. 

2.12. Qantas and British Airways have a Joint Services Agreement, most recently authorised 

by the ACCC on 31 March 2010. American Airlines has been granted antitrust 

immunity by the United States Department of Transportation (US DOT) for an 

integrated alliance with British Airways, Iberia, Finnair and Royal Jordanian, and by 

the European Union’s Directorate General Competition for a joint business agreement 

with British Airways and Iberia in respect of their European Union to North America 

operations. Additionally, an integrated alliance between American Airlines and Japan 

Airlines covering their trans-Pacific services between North America and Asia has 

recently been approved by the US DOT and the relevant Japanese regulatory 

authorities. 

The JBA 

2.13. The applicants currently sell tickets on each others’ services under a free sale 

Codeshare Agreement dated 23 September 2004. Since American Airlines ceased 

American-Qantas Joint Application Exhibit 5
DETERMINATION 5 A91265 & A91266 

operations on the trans-Pacific routes in 1992, it has placed its code on a number of 

services within Qantas’ trans-Pacific and domestic Australian and New Zealand 

network. Qantas places its code on American Airlines domestic services within the 

United States, and also on services between the United States and Canada/Mexico.3

2.14. The JBA will supersede the existing Codeshare Agreement. The JBA involves the 

coordination of operations on certain designated routes (the JB Services), including: 

 trans-Pacific routes; 

- Brisbane – Los Angeles and Dallas/Fort Worth 

- Sydney – Los Angeles, New York (JFK), Dallas/Fort Worth and Honolulu 

- Melbourne – Los Angeles 

- Auckland – Los Angeles 

 and ‘behind and beyond’ codeshare routes4. 

2.15. Qantas will operate trans-Pacific services and connecting services in Australia and on 

the trans-Tasman on behalf of the JBA. American Airlines will operate connecting 

services in the United States, Canada and Mexico and provide sales support for the 

Trans-Pacific Routes. 

2.16. Qantas and American Airlines (and their related bodies corporate) may coordinate the 

following under the JBA: 

 flying operations 

 codesharing 

 interlining 

 pricing and revenue management 

 scheduling (including frequencies and connection requirements) 

 cargo 

 passenger sales and marketing 

 holiday/vacation products and packages 

 frequent flyer programs 

 

3

 Qantas and American Airlines, Submission in support of applications for authorisation, 11 May 2011. 

4

 For a complete list of existing routes see: Qantas and American Airlines, Submission in support of applications for 

authorisation, 11 May 2011, Appendix E - The JB Services. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 6 A91265 & A91266 

 distribution 

 customer rebates, incentives and discounts 

 agency arrangements (including coordinating agency commissions, rebates, 

incentives and discounts) 

 ground handling 

 airport services 

 co-branded joint offices 

 corporate dealing and 

 joint procurement. 

2.17. For example, the applicants propose to: 

 establish a Joint Management Committee to conduct the JBA and govern the 

activities of the applicants on the JB Services 

 develop new fare products and promotions and conduct integrated marketing 

campaigns drawing on the marketing presence of both carriers in their respective 

home markets and 

 establish joint management and planning of ground products and services, 

including; coordinating the use of airport facilities by expanding reciprocal airport 

lounge access, developing joint lounges at certain airports and streamlining checkin facilities. 

The aviation industry 

International aviation regulation 

2.18. The international airline industry is highly regulated. The 1944 Convention on 

International Civil Aviation established the principle that each country has exclusive 

sovereignty over its airspace. This principle continues to guide the regulatory 

framework today. 

2.19. International air transport cannot occur unless it is specifically authorised pursuant to a 

government to government bilateral air services agreement (ASA). 

2.20. An ASA specifies the terms and conditions of airline activity between two countries. 

An ASA may indicate the destinations that can be served in a particular country, the 

permitted frequencies per week and any rights to operate via or beyond to third 

countries. Typically, the rights granted under an ASA can only be exercised by 

designated carriers of the countries that are parties to them. 

2.21. An Open Skies Agreement is one form of ASA between two countries. In essence, it is 

an agreement which provides minimal (or no) restrictions on the ability of the airlines 

of two countries to operate services between countries. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 7 A91265 & A91266 

Australia/United States Open Skies Agreement 

2.22. On 14 February 2008, Australia and the United States concluded the Open Skies 

Agreement (OSA), allowing all Australian and American owned carriers to provide 

unlimited direct services between the two countries. Air New Zealand can provide 

unlimited direct services by combining rights established under the United States/New 

Zealand and Australia/New Zealand open skies arrangements. 

2.23. Under the OSA, the carriage of traffic over domestic sectors is reserved for national 

carriers. The agreement only allows the beyond carriage of genuine international traffic 

between international gateways (for example, Qantas’ own trans-Pacific passengers 

between Los Angeles and New York).5

 This means international airlines depend on 

commercial arrangements with domestic carriers in order to offer behind or beyond 

international gateway markets. 

 

5

 Air Transport Agreement between the Government of the United States and the Government of Australia, 1944, 

Annex I, section 1. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 8 A91265 & A91266 

3. Submissions received by the ACCC 

3.1. The ACCC tests the claims made by the applicant in support of an application for 

authorisation through an open and transparent public consultation process. To this end 

the ACCC aims to consult extensively with interested parties that may be affected by 

the proposed conduct to provide them with the opportunity to comment on the 

application. 

3.2. Broadly, Qantas and American Airlines submit that they can achieve the following 

public benefits by working together under the JBA: 

 improved product and services including new routes, additional frequencies, 

improved schedules, enhanced connectivity and better ground product and services 

 new fare products and lower fares to more destinations through a revision of fare 

zones, the introduction of a ‘Walkabout Pass’ and provision for preferential 

availability ensuring more availability for discounted fares across a broader travel 

period 

 increased tourism though increased passenger traffic and a focus on strategic joint 

promotion 

 streamlined corporate travel procurement and 

 a stronger frequent flyer proposition. 

3.3. The ACCC sought submissions from approximately 90 interested parties potentially 

affected by the application, including competitors, airports, travel agents, government 

departments, regulators and tourism and industry groups. The ACCC received 

submissions from Sydney Airport, Brisbane Airport and Virgin Australia. 

3.4. Sydney Airport considers the proposed JBA will result in a number of public benefits, 

which will be seen across the broader economy and the Australian tourism industry 

from an improvement in their travel experience. Sydney Airport considers airline 

passengers will benefit from an improvement in their travel experience, particularly 

outbound international passengers as they will be able to purchase online journeys 

across international and United States networks offered by American Airlines. 

3.5. Brisbane Airport supports the application, noting the potential public benefits, 

including improved tourism from the United States, and also noting that there is no 

lessening of competition on the trans-Pacific route. 

3.6. Virgin Australia opposed the granting of interim authorisation to the JBA, but did not 

directly comment on whether final authorisation should be granted. Virgin Australia 

queried whether the commercial imperatives on which the application for interim 

authorisation was based were still applicable; whether Qantas would still continue to 

offer the Dallas/Fort Worth services even if it did not obtain interim authorisation for 

the alliance; and how the applicants would unwind the alliance if final authorisation 

were not granted. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 9 A91265 & A91266 

3.7. The applicants only responded directly to Virgin Australia’s submission. The applicants 

submitted that the commercial imperatives for seeking interim authorisation were 

applicable as the critical launch period for a new service extends into subsequent 

months; the expansion to daily Dallas/Fort Worth services would be unlikely without 

the JSA; and unwinding the alliance will present little difficulty given American 

Airlines does not operate on the trans-Pacific. 

3.8. On 22 August 2011, the ACCC issued a draft determination proposing to grant 

authorisation. A conference was not requested, and the ACCC did not receive any 

further submissions from interested parties, in relation to the draft determination. 

3.9. The views of the applicants and interested parties are outlined in the ACCC’s 

evaluation of the JBA in Chapter 4 of this determination. Copies of public submissions 

may be obtained from the ACCC’s website (www.accc.gov.au/AuthorisationsRegister) 

and by following the links to this matter. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 10 A91265 & A91266 

4. ACCC evaluation 

4.1. The ACCC’s evaluation of the JBA is in accordance with tests found in: 

 section 90(8) of the Act which states that the ACCC shall not authorise a proposed 

exclusionary provision of a contract, arrangement or understanding, unless it is 

satisfied in all the circumstances that the proposed provision would result or be 

likely to result in such a benefit to the public that the proposed contract, 

arrangement or understanding should be authorised. 

 sections 90(6) and 90(7) of the Act which state that the ACCC shall not authorise a 

provision of a proposed contract, arrangement or understanding, other than an 

exclusionary provision, unless it is satisfied in all the circumstances that: 

- the provision of the proposed contract, arrangement or understanding in the 

case of section 90(6) would result, or be likely to result, or in the case of 

section 90(7) has resulted or is likely to result, in a benefit to the public and 

- that benefit, in the case of section 90(6) would outweigh the detriment to the 

public constituted by any lessening of competition that would result, or be 

likely to result, if the proposed contract or arrangement was made and the 

provision was given effect to, or in the case of section 90(7) has resulted or is 

likely to result from giving effect to the provision. 

 sections 90(5A) and 90(5B) of the Act which state that the ACCC shall not 

authorise a provision of a proposed contract, arrangement or understanding that is 

or may be a cartel provision, unless it is satisfied in all the circumstances that: 

- the provision, in the case of section 90(5A) would result, or be likely to result, 

or in the case of section 90(5B) has resulted or is likely to result, in a benefit to 

the public and 

- that benefit, in the case of section 90(5A) would outweigh the detriment to the 

public constituted by any lessening of competition that would result, or be 

likely to result, if the proposed contract or arrangement were made or given 

effect to, or in the case of section 90(5B) outweighs or would outweigh the 

detriment to the public constituted by any lessening of competition that has 

resulted or is likely to result from giving effect to the provision. 

4.2. For more information about the tests for authorisation and relevant provisions of the 

Act, please see Attachment C. 

The market 

4.3. The first step in assessing the effect of the conduct for which authorisation is sought is 

to consider the relevant markets affected by that conduct. 

4.4. Previously, the ACCC has considered the impact of aviation alliance agreements on 

competition in the following markets: 

American-Qantas Joint Application Exhibit 5
DETERMINATION 11 A91265 & A91266 

 international air passenger transport services, with regard to particular geographic 

and product segments 

 international air freight transport services 

 the sale of air passenger transport services and 

 Australian domestic air passenger transport services. 

4.5. The applicants note that the ACCC draws the data for the analysis of these markets 

from the Australian Bureau of Statistics (ABS). The applicants consider that this data 

distorts the market definition because it is collected on the basis of ‘purpose of travel’ 

rather than actual class travelled, and it would arguably be more accurate to 

characterise the market in terms of a premium segment and an economy segment 

reflecting cabin of travel rather than purpose of travel. Nevertheless, for the purposes of 

this matter, the applicants have provided information based on the markets previously 

identified by the ACCC. 

International air passenger transport services 

4.6. As set out above, the JBA provides for coordinated commercial arrangements between 

Qantas and American Airlines in respect of air passenger services on the trans-Pacific 

routes and all ‘behind and beyond’ routes; including Qantas’ international services 

between Australia and New Zealand, and American Airlines domestic United States 

network and international services between the United States and Canada and Mexico. 

4.7. The applicants currently do not operate any overlapping direct services6

. Given the 

current international aviation regulatory environment, and absent any stated intention of 

American Airlines to enter the trans-Pacific market, the ACCC considers that the 

applicants are unlikely to offer any competing services in the future. 

Product dimension 

4.8. The ACCC has previously identified separate product markets for leisure and business 

passenger services on long haul routes, including in its 2009 determination in relation 

to the alliance between Virgin Blue and Delta Air Lines on trans-Pacific routes.7

 

 

6

 The ACCC recognises that Qantas and American Airlines could be said to be operating competing services for 

those passengers who may choose to travel indirectly between an Australian gateway city and Dallas/Fort Worth or 

New York City. Specifically, a passenger travelling from Sydney – Dallas/Fort Worth could fly directly with 

Qantas, or indirectly with Qantas on the Sydney – Los Angeles segment and with American Airlines on the Los 

Angeles – Dallas/Fort Worth segment. Similarly, a passenger travelling from Sydney – New York City has the 

option to fly on Qantas services for the entire journey, or fly the Sydney – Los Angeles segment with Qantas and 

the Los Angeles – New York City segment with American Airlines. 

7

 ACCC, Determination for applications A91195 & A91196 lodged by Qantas & British Airways (2010); 

ACCC, Determination for applications A91227 & A91228 lodged by Virgin Blue & Air New Zealand (2010); 

ACCC, Determination for applications A91151-2 & A91172-3 lodged by Virgin Blue & Delta Air Lines (2009); 

ACCC, Determination for applications A91097 & A91098 lodged by Air New Zealand and Air Canada (2009). 

American-Qantas Joint Application Exhibit 5
DETERMINATION 12 A91265 & A91266 

4.9. This approach is based on the view that there are limitations in demand and supply side 

substitutability which make it appropriate to distinguish between more price sensitive 

(leisure) passengers and more time sensitive (business) passengers, in particular on 

long-haul routes. 

4.10. The ACCC understands that leisure travellers are relatively more price sensitive and 

relatively less concerned about factors such as travel time, flexibility, connectivity, 

convenience and comfort when compared to business passengers. Notwithstanding the 

applicants’ submissions, the ACCC considers that, particularly on long haul routes, 

these sensitivities generally apply regardless of which cabin a business or leisure 

passenger chooses to travel in. 

4.11. The ACCC considers that in the market for international air passenger transport 

services, adopting a narrow or broad product market is not likely to alter the assessment 

in this case, since the applicants do not currently offer any competing services. 

Geographic dimension 

4.12. The ACCC has previously considered both a city-pairs/point-to-point approach and a 

regional approach in defining the geographic scope of the market for international air 

passenger transport services.8

 

4.13. The ACCC notes that adopting a point-to-point or regional market is not likely to alter 

the assessment in this case, since the applicants currently do not operate any 

overlapping direct services. 

4.14. In light of this, the ACCC considers that the services to be provided under the JBA give 

some guidance on the relevant geographic market. The ACCC considers that this 

indicates the relevant geographic market is the provision of international air transport 

services for passengers travelling between Australia and the United States, and on 

extensive ‘behind and beyond’ services across both their networks to the extent they 

support the trans-Pacific services. 

International air freight transport services 

4.15. No information has been provided which suggests that the ACCC should depart from 

the view adopted in previous analysis that different types of freight represent different 

freight segments rather than different markets. The availability of indirect route options 

suggests that the geographic dimension is unlikely to be narrower than a regional 

market. 

 

4.16. The ACCC considers that for the purposes of assessing the impact of the JBA with 

regard to the provision of air freight transport services, it is appropriate to consider a 

market for air freight transport services on a regional basis, that is, between Australia 

and the United States. 

 

8ACCC, Determination for applications A91195 & A91196 lodged by Qantas and British Airways (2010); 

ACCC, Determination for applications A91227 & A91228 lodged by Virgin Blue & Air New Zealand (2010); 

ACCC, Determination for applications A91151-2 & A91172-3 lodged by Virgin Blue & Delta Air Lines (2009). 

American-Qantas Joint Application Exhibit 5
DETERMINATION 13 A91265 & A91266 

The sale of air passenger transport services 

4.17. In previous determinations in respect of aviation alliances, the ACCC has recognised a 

separate market for the sale of air passenger transport services, which includes tickets 

sold directly by airlines to travellers as well as those sold through indirect channels 

such as travel agents. 

4.18. Similarly to the market for international air freight transport, no information has been 

provided which suggests that the ACCC should depart from this view. 

Australian domestic air passenger transport services 

4.19. The ACCC has previously recognised that an international aviation alliance could 

affect competition in the market for domestic air passenger transport services by 

directing domestic on-carriage or feeder traffic to a particular carrier, at the expense of 

the competitive position of other domestic carriers. 

4.20. The ACCC notes that the JBA could have such an effect, by directing American 

Airlines’ United States originating passengers on to Qantas’ trans-Pacific services and 

then to onward domestic connections with Qantas. 

4.21. The ACCC has not received any information which suggests that it should depart from 

a consideration of the impact of the JBA on domestic air passenger transport services. 

Therefore, the ACCC considers it relevant to consider the impact of the JBA on the 

market for domestic air transport services for passengers travelling within Australia 

Conclusion on relevant areas of competition 

 

4.22. For the purpose of assessing this application, on the basis of the issues outlined above 

the ACCC considers the relevant areas of competition for the purpose of assessing the 

impact of the JBA are: 

 international air passenger transport services between Australia and the United 

States, between Australia and Canada or Mexico via the United States, and between 

the United States and New Zealand via Australia 

 international air freight transport services between Australia and the United States 

 the sale of air passenger transport services and 

 domestic air passenger transport services in Australia. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 14 A91265 & A91266 

The counterfactual

4.23. The ACCC applies the ‘future with-and-without test’ established by the Tribunal to 

identify and weigh the public benefit and public detriment generated by conduct for 

which authorisation has been sought.9

4.24. Under this test, the ACCC compares the public benefit and anti-competitive detriment 

generated by arrangements in the future if the authorisation is granted with those 

generated if the authorisation is not granted. This requires the ACCC to predict how 

the relevant markets will react if authorisation is not granted. This prediction is 

referred to as the ‘counterfactual’. 

4.25. The applicants submit that without authorisation they would: 

 continue to act independently in marketing and sales while offering an inferior 

network, schedule and capacity and frequent flyer offering and a less efficient 

procurement process compared to what they would be able to offer as a joint 

business. 

 be unable to realise the benefits and efficiencies of integration and would be 

disadvantaged compared to the Virgin/Delta alliance (recently granted anti-trust 

immunity in the United States) and the United/Air New Zealand alliance (both are 

members of the Star Alliance). 

4.26. In their submission in support of interim authorisation, the applicants stated that 

without the ability to cooperate, the current frequency of the new Dallas/Fort Worth 

services may not be sustainable, and expansion to daily services would be unlikely.10

4.27. The ACCC did not receive any other submissions on the likely counterfactual. 

4.28. The ACCC considers that without authorisation: 

 the parties would continue to operate non-overlapping direct services under their 

existing free sale Codeshare Agreement 

 American Airlines would continue to place its code on a number of services within 

Qantas’ trans-Pacific, Australian and New Zealand network, and Qantas would 

continue to place its code on American Airlines’ domestic services within the 

United States, and also on services between the United States and Canada/Mexico. 

 Qantas will continue to operate some services between Sydney and Dallas/Fort 

Worth with fewer frequencies than anticipated under the Alliance. 

 

9 Australian Performing Rights Association (1999) ATPR 41-701 at 42,936. See also for example: Australian 

Association of Pathology Practices Incorporated (2004) ATPR 41-985 at 48,556; Re Media Council of 

Australia (No.2) (1987) ATPR 40-774 at 48,419. 

10 Qantas and American Airlines, Submission in support of application for interim authorisation, 2 June 2011. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 15 A91265 & A91266 

Public benefit 

4.29. Public benefit is not defined in the Act. However, the Tribunal has stated that the term 

should be given its widest possible meaning. In particular, it includes: 

...anything of value to the community generally, any contribution to the aims pursued by society 

including as one of its principle elements ... the achievement of the economic goals of efficiency 

and progress.11

4.30. The applicants submits that the JBA, will deliver public benefits, including: 

 new and improved products and services 

 new fare products and lower fares 

 increased tourism 

 streamlined corporate travel procurement and 

 a stronger frequent flyer proposition. 

4.31. The ACCC’s assessment of the likely public benefits of the JBA follows. 

New and improved products and services 

4.32. The applicants submit that the JBA will enable the addition of new routes, increased 

frequencies, improved schedules, enhanced connectivity and better ground products 

and services. 

4.33. Dallas/Fort Worth is the major hub of American Airlines, where it operates (with 

American Eagle) approximately 750 flights to 186 destinations worldwide. The 

applicants note that Qantas’ new Sydney – Dallas/Fort Worth services are supported by 

28 codeshare destinations from Dallas/Fort Worth to a wide range of major cities across 

the United States, Canada and Mexico. 

4.34. The applicants consider that the JBA provides a joint platform for the applicants to 

ensure the viability of the new Dallas/Fort Worth services and increase these services to 

a daily frequency as soon as possible. 

4.35. The applicants submit that the JBA will also provide them with an incentive and 

opportunity to explore the expansion of their codeshare network and launch new transPacific routes and connections. They note that under their existing codeshare 

relationship, the addition of new codeshare destinations is limited by the perception that 

administrative costs may outweigh any benefit of increased traffic. The applicants 

consider that the detailed sharing of market information under the JBA will lead to 

 

11 Re 7-Eleven Stores (1994) ATPR 41-357 at 42,677. See also Queensland Co-operative Milling Association Ltd

(1976) ATPR 40-012 at 17,242. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 16 A91265 & A91266 

improved demand forecasting, prompt identification of market opportunities and 

enhanced ability to cater for growth through the addition of routes and frequencies. 

4.36. By way of example, the applicants note that initial response to the Dallas/Fort Worth 

service indicates Vancouver, Calgary and Toronto are high demand ‘beyond’ 

destinations. At the moment these destinations involve relatively long connection 

times. The applicants submit that the JBA would provide the opportunity to reduce 

transit times by the better coordination of schedules. 

4.37. Finally, the applicants submit that an integrated management and planning structure 

allowed under the JBA will enable a coordinated strategy to improve ground products 

and service for passengers through the expansion of reciprocal lounge access and 

improved check-in processes. 

 

4.38. The ACCC recognises that when airlines providing complementary services act 

independently, the effect that each airline has on the demand for the other airline’s 

services is not taken into account by either party in planning network products and 

services. The consequence of this ‘externality’12 can include less convenient or more 

time consuming connections and/or lower levels of provision of ground services such 

as airport lounges and check-in services. 

4.39. For instance, air travel from Adelaide to Chicago requires a domestic segment in 

Australia (Adelaide – Melbourne), an international segment (say, Melbourne – Los 

Angeles) and a domestic segment in the Unites States (Los Angeles – Chicago). The 

carriers operating these segments provide complementary services. A change in 

scheduling of a carrier operating one segment, say Melbourne – Los Angeles, can affect 

the demand for travel on the connecting domestic segments. However, as independent 

airlines, Qantas will not take into consideration any change in demand for American 

Airlines’ services in making decisions about products and services on its segments. 

Similarly, American Airlines will not take into account the effect of changes to 

products and services on its Los Angeles – Chicago segment on the demand for Qantas’ 

Adelaide – Melbourne and Melbourne – Los Angeles segments. 

4.40. The ACCC accepts that cooperation agreements can provide a means to address this 

externality or inefficiency by enabling airlines to share the benefits of an increase in 

demand across complementary segments. Typically, these cooperation agreements 

involve the ability to jointly set schedules and fares, and often some revenue sharing 

mechanism between the airlines. 

4.41. The ACCC considers that the applicants are likely to have the incentive under the JBA 

to optimise their joint network offering. To the extent that the JBA facilitates this 

network optimisation, the ACCC considers that it is likely to result in public benefit by 

providing consumers with improved schedules and connectivity, a greater choice of 

connection and stop-over options, and the possibility of new and improved routes. 

 

12 An externality is an economic term referring to a cost or benefit that affects a third party (a party who did not 

agree to the action causing the cost or benefit) and is not reflected in market prices. In the presence of an 

externality, market prices do not reflect the full costs or benefits of producing or consuming a product or service. 

This results in an economic inefficiency or market failure. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 17 A91265 & A91266 

4.42. Additionally, the ACCC considers that the JBA is likely to provide the applicants with 

strong incentives to offer ground services to each others’ customers on an equal basis. 

The ACCC accepts that this is likely to result in public benefit by providing consumers 

with expanded reciprocal lounge access (which will be of benefit to business 

passengers in particular) and improved check-in processes. 

New fare products and lower fares 

4.43. The applicants submit that the JBA will enable the development of new fare products 

and lower fares for passengers travelling from Australia to the United States, such as a 

simplified zoned pricing structure and the creation of a ‘Walkabout’ multi-sector pass. 

The applicants submit that these initiatives will create tangible benefits to consumers, 

including: 

 additional discounts to the majority of the top 20 United States destinations 

 

 offering new tactical destinations and 

 a preferential availability agreement with American Airlines. 

4.44. The applicants currently offer fares in the United Stated according to a geographic zone 

structure. Under the applicants’ proposed simplification of zoned pricing, the current 

six zones will be reduced to three, as set out in figures 4.1 and 4.2 below. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 18 A91265 & A91266 

Figure 4.1: Current six zone structure13

Figure 4.2: Proposed three zone structure14

 

13 Qantas and American Airlines, Submission in support of applications for authorisation, 11 May 2011, p. 28. 

14 Qantas and American Airlines, Submission in support of applications for authorisation, 11 May 2011, p. 28. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 19 A91265 & A91266 

4.45. The applicants submit that the new three zone pricing structure will: 

 be simpler to manage and communicate to consumers and trade 

 result in fare reductions for 64% of United States destinations 

 allow a broader offering of discounted tactical fares to an increased number of 

destinations and 

 allow expanded stop-over options between gateway cities in the United States and 

end destinations. 

 

4.46. In their submission, the applicants illustrate the difference in fares under the six and 

three zone fare structure and set out the resulting fare reductions to 20 ‘popular’ United 

States destinations (see figures 4.3 and 4.4 below). 

Figure 4.3: Comparison of the six and three zone fare structure15

 

15 Qantas and American Airlines, Submission in support of applications for authorisation, 11 May 2011, p. 29. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 20 A91265 & A91266 

Figure 4.4: Fare reductions by city16

4.47. The applicants consider that the joint approach to planning and pricing facilitated by 

the JBA would involve common use and access to fares, and enable them to optimise 

the number of discounted seats available through the booking life of a flight as well as 

the strategic release of discounted inventory to drive volume on poor performing 

routes. 

4.48. The applicants submit that the JBA will allow them to introduce a ‘Walkabout Pass’ for 

passengers travelling to the United States from Australia and New Zealand. Using the 

Walkabout Pass, a passenger can fly multiple sectors on the same ticket as opposed to 

purchasing sector fares. Currently, passengers travelling to the United States can use a 

oneworld ‘Visit North America Pass’, but the applicants submit that this product is not 

stop-over friendly and involves ‘add-ons’ to the Los Angeles tariff. 

4.49. The applicants consider that the proposed Walkabout Pass would enable more effective 

marketing of beyond gateway multi-sector itineraries, under which fares would be 

based on mileage and tiered accordingly. They submit that these tiered fare levels 

would result in lower lead-in fares. Qantas proposes to offer American Airlines access 

to a domestic Australia pass to boost American Airline’s ex-United States offering. 

4.50. The applicants also consider that the JBA would enable them to develop and promote 

fare products for multi-stop itineraries across a range of destinations in a way not 

 

16 Qantas and American Airlines, Submission in support of applications for authorisation, 11 May 2011, p. 29. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 21 A91265 & A91266 

facilitated by the current oneworld multi-sector products, such as United States – 

Australia via Asia or United States – Asia via Europe. 

4.51. The ACCC considers that the JBA creates potential for lower connecting fares between 

the parties and new fare products as a result of: 

 better coordination of available capacity on their respective domestic sectors to 

realise higher load factors and 

 removal or reduction of ‘double marginalisation’, which is a situation that occurs 

where suppliers of vertically related or complementary products independently 

charge a price which includes a mark-up over their costs to maximise their 

individual profits and do not take account of the impact of these prices on demand 

for the other airline’s services. The net result is higher prices on connecting routes 

than if the two firms were to coordinate their pricing, for example, through a 

cooperation agreement or alliance such as the JBA. 

4.52. The ACCC considers that the JBA is likely to result in public benefit by facilitating 

new fare products and lower fares. 

Increased tourism 

4.53. The applicants submit that by drawing on the expertise of Qantas and American 

Airlines in their respective home countries, and the provision of better information to 

agents, the JBA will be able to achieve more efficiently and effectively the promotion 

of travel to Australia. 

4.54. Drawing on Qantas’ Australian expertise and infrastructure, the applicants submit that 

the JBA would allow American Airlines’ AAVacations to develop a comprehensive 

range of Australian and Asia Pacific land, air and integrated products and actively 

market this to residents of the United States and its own customer base. To achieve this, 

it is proposed that AAVacations would partner with Tour East Australia, a majority 

owned subsidiary of Qantas. The applicants submit: 

Cooperation between Qantas and AAVacations will drive improved access to lower priced land 

inventory in Australia as a result of the increased purchasing scale. This would enable both 

Qantas and AAVacations to pass these savings on to consumers. In the case of AAVacations, it is 

estimated that these arrangements would enable it to offer integrated holiday packages at a 5 to 

15% discount to the cost of purchasing flights and land components separately.17

4.55. AAVacations estimates that, based on its experience of conversion rates in other 

markets and the specific characteristics of Australia as a destination, the launch of 

Australian vacations packages could initially generate up to 360 additional visitors to 

Australia and New Zealand per month. 

4.56. The ACCC has noted previously that there are a wide range of factors which influence 

tourism demand, including general purchasing power in source countries, the relative 

 

17 Qantas and American Airlines, Submission in support of applications for authorisation, 11 May 2011, p. 32. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 22 A91265 & A91266 

cost of other destinations, the total cost of visiting Australia (land as well as air 

component) and the perceived quality of Australia as a destination.18

 

4.57. In this case, the ACCC considers that the JBA may stimulate tourism both by 

enhancing the applicants’ joint network offering and by integrating the sales and 

distribution network of AAVacations and Qantas’ Tour East Australia. The ACCC 

notes the applicants’ estimates of holiday package cost savings and increased visitor 

numbers, and considers that stimulation of tourism may be a source of some public 

benefit under the JBA. 

Streamlined corporate travel procurement 

4.58. The applicants submit that together, they can develop a joint strategy to better service 

their corporate customers by drawing on their respective experience and perspective. 

They consider the JBA will enable them to develop joint fare products for large 

corporate as well as small-to-medium enterprises, and provide incentives to leverage 

their home point-of-sale strengths to promote and distribute these products. 

4.59. The ACCC considers these public benefits have mostly been considered by the ACCC 

in the three sections above: the ACCC recognises that the JBA will provide incentives 

for the applicants to develop a range of new products and services and offer lower 

fares. Therefore, this benefit claim will not be further considered here. 

A stronger frequent flyer proposition 

4.60. The applicants submit that the JBA provides incentives for them to consider mutual 

automatic status recognition for members of both frequent flyer programs, AAdvantage 

and Qantas Frequent Flyer. This means that frequent flyer members of either program 

will have increased opportunities to earn and/or redeem frequent flyer points and take 

advantage of other membership benefits when travelling on the other airline, such as 

cabin upgrade offers and onboard loyalty status recognition. The applicants submit that 

this will benefit customers and make the airlines' loyalty programs more competitive. 

4.61. Qantas and American Airlines also consider that the JBA provides incentives to better 

leverage their respective strengths of both AAdvantage and Qantas Frequent Flyer 

membership bases to conduct joint marketing programs, generating more traffic for the 

joint network. They submit that this benefit would not be possible absent the JBA. 

4.62. The ACCC acknowledges that the JBA will enable the applicants to initiate reciprocal 

status recognition and point accrual, which will enhance the attractiveness of both 

airlines’ loyalty programs. Generally speaking, the ACCC considers that the public 

benefits from reciprocal access to loyalty programs are likely to accrue to passengers 

who prefer to fly with one of the alliance members, are members of an alliance loyalty 

program and who value the ability to earn or use frequent flyer points. 

 

18 ACCC Determination for applications A91097 and A91098 lodged by Air New Zealand Limited and Air Canada, 

January 2009, page 23. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 23 A91265 & A91266 

ACCC conclusion on public benefits 

4.63. The ACCC considers that the JBA is likely to result in public benefits in the form of: 

 new and improved products and services (including improved schedules and 

connectivity, a greater choice of connection and stop-over options, and the 

possibility of new and improved routes) and enhanced value added services 

(including reciprocal lounge access, equivalent frequent flyer privileges and 

improved check-in procedures) 

 new fare products and lower fares 

 an enhanced frequent flyer proposition and 

 potentially, the stimulation of Australian tourism. 

Public detriment 

4.64. Public detriment is also not defined in the Act but the Tribunal has given the concept a 

wide ambit, including: 

...any impairment to the community generally, any harm or damage to the aims pursued by the 

society including as one of its principal elements the achievement of the goal of economic 

efficiency.19

4.65. Qantas and American Airlines submit that the proposed JBA will not result in any anticompetitive detriment, as they have complementary rather than overlapping networks. 

4.66. The ACCC’s assessment of whether the JBA would be likely to result in any public 

detriment is set out below. 

International air passenger transport services 

4.67. The applicants submit that American Airlines passengers represent only 2.8% of the 

1,860,935 passengers carried between Australia and the United States in the financial 

year ending June 2010. They consider that this small share reflects the reality that 

American Airlines does not operate its own services on the trans-Pacific route, has 

limited sales presence and recognition in Australia, and does not actively market 

Australia as a destination. 

4.68. The applicants do not consider the JBA will give them the ability or incentive to 

increase prices or offer diminished service as they are constrained by the other carriers 

operating on the trans-Pacific and the threat of entry (or re-entry) afforded by the Open 

Skies Agreement. 

4.69. The applicants submit that the recent entry and rapid expansion of Virgin Australia and 

Delta demonstrates the ease with which carriers can establish a presence on the trans-

 

19 Re 7-Eleven Stores (1994) ATPR 41-357 at 42,683. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 24 A91265 & A91266 

Pacific routes. The applicants also note that over the last two years the trans-Pacific 

routes have been characterised by constant sale20 activity in all cabins with a view to 

maintaining load factor in light of the increased capacity on the routes and heightened 

price sensitivity of business and leisure travellers. 

4.70. The ACCC notes that the applicants face direct competition from United Airlines, the 

Virgin Australia/Delta alliance, and to a lesser extent Air New Zealand, which operates 

services between Australia and the United States via New Zealand. In addition, the 

ACCC considers that indirect carriers21 may pose some, albeit limited, competitive 

constraint on the applicants. 

4.71. The applicants note that the Qantas Group’s market share has declined over the last 

couple of years in the markets for both leisure and business passengers between 

Australia and the United States. They note that this decline can be attributed to the 

entry of Virgin Australia and Delta in 2009.22

4.72. Despite Qantas’ recent decline in market share, the ACCC notes that it remains the 

largest player on the trans-Pacific route, with a 43% share of passengers (48% 

including Jetstar) in the year ended June 2010.23 However, given American Airlines 

does not operate services on this route, the ACCC does not consider that the JBA will 

have any anti-competitive effect on these market dynamics. 

International air freight transport services 

4.73. The applicants note that Qantas and American Airlines have an interline agreement in 

respect of the carriage of freight on the trans-Pacific routes. The ACCC understands 

that the applicants do not offer any competing direct freight services. Based on the 

information available, the ACCC does not consider the JBA raises any significant 

competition concerns in the international air freight transport services market. 

4.74. The ACCC notes that there are a number of other competitors in the market for air 

freight transport services between Australia and the United States, including major 

players such as Virgin Australia/Delta, United, FedEx, and United Parcel Services. 

The sale of air transport services 

4.75. The ACCC considers that the JBA is unlikely to adversely affect the market for the sale 

of air transport services given the wide range of mechanisms for ticket purchases 

available to consumers. The ACCC notes that while the JBA allows the applicants to 

jointly market their services, there is strong competition in the sale of air transport 

 

20 The ACCC takes this to mean frequent discounting of fares 

21 Access to mainland United States from Australia is also available through indirect services over Asia using 

airlines such as Singapore Airlines and Cathay Pacific. The ACCC notes, however, that the market shares held by 

such carriers are relatively small in comparison to the direct carriers. 

22 For more detailed information, see Qantas and American Airlines, Submission in support of applications for 

authorisation, 11 May 2011, pp. 23 - 24 and Appendices G - I. 

23 Qantas and American Airlines, Submission in support of applications for authorisation, 11 May 2011, Appendix 

G 

American-Qantas Joint Application Exhibit 5
DETERMINATION 25 A91265 & A91266 

services from travel agencies (online and in shop fronts) as well as increasingly from 

the internet through global portals such as Zuji, Expedia and Webjet. 

Australian domestic air passenger transport services 

4.76. As noted above, an international alliance has the potential to lessen competition in the 

market for domestic air passenger transport services where the alliance directs domestic 

on-carriage or feeder traffic to a particular carrier (in this case, Qantas in Australia) at 

the expense of the competitive position of other domestic carriers. 

4.77. The ACCC notes that under the applicants’ current Codeshare Agreement, American 

Airlines passengers flying beyond or behind the Australian gateway cities (Brisbane, 

Sydney, Melbourne) are placed on Qantas domestic connections in any event. The 

ACCC also notes that passengers can opt to purchase the domestic leg of their journey 

separately. 

4.78. Therefore, the ACCC does not consider that the JBA is likely to have any significant 

anti-competitive effects in the Australian domestic air passenger transport services 

market. 

ACCC conclusion on public detriments 

4.79. The ACCC considers that the JBA is unlikely to result in any anti-competitive 

detriment, given the applicants do not currently directly compete, nor are they likely to 

directly compete in any of the relevant markets. 

Balance of public benefit and detriment 

4.80. In general, the ACCC may only grant authorisation if it is satisfied that, in all the 

circumstances, the JBA is likely to result in a public benefit, and that public benefit will 

outweigh any likely public detriment. 

4.81. In the context of applying the net public benefit test in section 90(8)24 of the Act, the 

Tribunal commented that: 

... something more than a negligible benefit is required before the power to grant authorisation can be 

exercised.25

4.82. For the reasons outlined in this chapter the ACCC considers the public benefits likely 

to result from the JBA are new and improved products and services, new fare products 

and lower fares, stimulation of tourism and an enhanced frequent flyer proposition. The 

ACCC does not consider that the JBA is likely to result any public detriment. 

 

24 The test at 90(8) of the Act is in essence that conduct is likely to result in such a benefit to the public that it 

should be allowed to take place. 

25

 Re Application by Michael Jools, President of the NSW Taxi Drivers Association [2006] ACompT 5 at 

paragraph 22. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 26 A91265 & A91266 

4.83. Accordingly, the ACCC considers the public benefit that is likely to result from the 

conduct is likely to outweigh the public detriment. The ACCC is therefore satisfied that 

the relevant tests are met. 

Length of authorisation

4.84. The Act allows the ACCC to grant authorisation for a limited period of time.26 The 

ACCC generally considers it appropriate to grant authorisation for a limited period of 

time, so as to allow an authorisation to be reviewed in the light of any changed 

circumstances. 

4.85. In this instance, Qantas and American Airlines seek authorisation for five years. The 

applicants submit that this period reflects the negligible detriment associated with the 

proposed JBA, and the significant public benefits that will be achieved. 

4.86. The ACCC did not receive any interested party submissions in relation to the length of 

authorisation sought. 

4.87. As indicated above, the ACCC considers that the JBA is likely to result in a number of 

public benefits, and there is unlikely to be any public detriment. On this basis, the 

ACCC grants authorisation for the JBA for five years. 

Variations to the JBA 

4.88. The ACCC notes that any amendments to the JBA during the term of this authorisation 

would not be covered by the authorisation. 

 

26 Section 91(1). 

American-Qantas Joint Application Exhibit 5
DETERMINATION 27 A91265 & A91266 

5. Determination 

The application

5.1. On 12 May 2011, Qantas and American Airlines lodged application for authorisation 

A91265 & A91266 with the Australian Competition and Consumer Commission (the 

ACCC). 

5.2. Application A91265 was made using Form A, Schedule 1, of the Competition and 

Consumer Regulations 2010. The application was made under subsection 88(1A) of

the Act to: 

 make and give effect to a contract, arrangement or understanding, a provision of 

which is or may be an exclusionary provision within the meaning of section 45 of 

the Act. 

 make and give effect to a provision of a contact, arrangement or understanding, a 

provision of which is, or may be, a cartel provision and which is also, or may also 

be, an exclusionary provision within the meaning of section 45 of that Act. 

5.3. Application A91266 was made using Form B, Schedule 1, of the Competition and 

Consumer Regulations 2010. The application was made under subsections 88(1A) and 

88(1) of the Act to: 

 make and give effect to a contract or arrangement, or arrive at an understanding, a 

provision of which would have the purpose, or would have or might have the 

effect, of substantially lessening competition within the meaning of section 45 of 

the Act. 

 make and give effect to a contract or arrangement, or arrive at an understanding a 

provision of which would be, or might be, a cartel provision (other than a provision 

which would also be, or might also be, an exclusionary provision within the 

meaning of section 45 of that Act). 

5.4. In particular, Qantas and American Airlines seek authorisation for a Joint Business 

Agreement (JBA). 

The net public benefit test 

5.5. For the reasons outlined in Chapter 4 of this determination, the ACCC considers that in 

all the circumstances the conduct for which authorisation is sought are likely to result 

in a public benefit that would outweigh the detriment to the public constituted by any 

lessening of competition arising from the conduct. 

5.6. The ACCC is satisfied that the conduct for which authorisation is sought is likely to 

result in such a benefit to the public that the conduct should be allowed to take place. 

5.7. The ACCC therefore grants authorisation to applications A91265 & A91266. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 28 A91265 & A91266 

Conduct for which the ACCC grants authorisation

5.8. Authorisation extends to Qantas and American Airlines for a Joint Business Agreement 

until 21 October 2016. 

5.9. Further, the authorisation is in respect of the JBA as it stands at the time authorisation 

is granted. Any changes to the JBA during the term of the authorisation would not be 

covered by the authorisation. 

5.10. This determination is made on 29 September 2011. 

5.11. Section 90(4) requires that the Commission state in writing its reasons for a 

determination. The attachments form part of the written reasons for this determination. 

Interim authorisation

5.12. At the time of lodging the application, Qantas and American Airlines requested interim 

authorisation to commence the JBA. The ACCC granted interim authorisation on 

9 June 2011. 

5.13. Interim authorisation will remain in place until the date the ACCC’s final determination 

comes into effect or until the ACCC decides to revoke interim authorisation. 

Date authorisation comes into effect

5.14. This determination is made on 29 September 2011. If no application for review of the 

determination is made to the Australian Competition Tribunal (the Tribunal), it will 

come into force on 21 October 2011. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 29 A91265 & A91266 

Attachment A — the authorisation process 

The Australian Competition and Consumer Commission (the ACCC) is the independent 

Australian Government agency responsible for administering the Competition and Consumer 

Act 2010 (the Act). A key objective of the Act is to prevent anti-competitive conduct, thereby 

encouraging competition and efficiency in business, resulting in a greater choice for consumers 

in price, quality and service. 

The Act, however, allows the ACCC to grant immunity from legal action in certain 

circumstances for conduct that might otherwise raise concerns under the competition provisions 

of the Act. One way in which parties may obtain immunity is to apply to the ACCC for what is 

known as an ‘authorisation’. 

The ACCC may ‘authorise’ businesses to engage in anti-competitive conduct where it is 

satisfied that the public benefit from the conduct outweighs any public detriment. 

The ACCC conducts a public consultation process when it receives an application for 

authorisation. The ACCC invites interested parties to lodge submissions outlining whether they 

support the application or not, and their reasons for this. 

After considering submissions, the ACCC issues a draft determination proposing to either grant 

the application or deny the application. 

Once a draft determination is released, the applicant or any interested party may request that the 

ACCC hold a conference. A conference provides all parties with the opportunity to put oral 

submissions to the ACCC in response to the draft determination. The ACCC will also invite the 

applicant and interested parties to lodge written submissions commenting on the draft. 

The ACCC then reconsiders the application taking into account the comments made at the 

conference (if one is requested) and any further submissions received and issues a final 

determination. Should the public benefit outweigh the public detriment, the ACCC may grant 

authorisation. If not, authorisation may be denied. However, in some cases it may still be 

possible to grant authorisation where conditions can be imposed which sufficiently increase the 

benefit to the public or reduce the public detriment. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 30 A91265 & A91266 

Attachment B — chronology of ACCC assessment for applications 

A91265 & A91266 

The following table provides a chronology of significant dates in the consideration of the 

applications by Qantas and American Airlines. 

DATE ACTION 

12 May 2011 Application for authorisation lodged with the ACCC, including an 

application for interim authorisation. 

27 May 2011 Closing date for submissions from interested parties in relation to the 

request for interim authorisation. 

8 June 2011 Closing date for submissions from interested parties in relation to the 

substantive application for authorisation. 

9 June 2011 The ACCC granted interim authorisation. 

22 August 2011 Draft determination issued. 

9 September 2011 Closing date for submissions from interested parties in relation to the draft 

determination. 

29 September 2011 Determination issued. 

American-Qantas Joint Application Exhibit 5
DETERMINATION 31 A91265 & A91266 

Attachment C — the tests for authorisation and other relevant 

provisions of the Act 

Competition and Consumer Act 2010 

Section 90—Determination of applications for authorisations

(1) The Commission shall, in respect of an application for an authorization: 

(a) make a determination in writing granting such authorization as it considers appropriate; or 

(b) make a determination in writing dismissing the application. 

(2) The Commission shall take into account any submissions in relation to the application made to it by the 

applicant, by the Commonwealth, by a State or by any other person. 

Note: Alternatively, the Commission may rely on consultations undertaken by the AEMC: see 

section 90B. 

(4) The Commission shall state in writing its reasons for a determination made by it. 

(5) Before making a determination in respect of an application for an authorization the Commission shall 

comply with the requirements of section 90A. 

Note: Alternatively, the Commission may rely on consultations undertaken by the AEMC: see 

section 90B. 

(5A) The Commission must not make a determination granting an authorisation under subsection 88(1A) in

respect of a provision of a proposed contract, arrangement or understanding that would be, or might be, a 

cartel provision, unless the Commission is satisfied in all the circumstances: 

(a) that the provision would result, or be likely to result, in a benefit to the public; and 

(b) that the benefit would outweigh the detriment to the public constituted by any lessening of 

competition that would result, or be likely to result, if: 

(i) the proposed contract or arrangement were made, or the proposed understanding were 

arrived at; and 

 (ii) the provision were given effect to. 

(5B) The Commission must not make a determination granting an authorisation under subsection 88(1A) in

respect of a provision of a contract, arrangement or understanding that is or may be a cartel provision, 

unless the Commission is satisfied in all the circumstances: 

(a) that the provision has resulted, or is likely to result, in a benefit to the public; and 

(b) that the benefit outweighs or would outweigh the detriment to the public constituted by any 

lessening of competition that has resulted, or is likely to result, from giving effect to the 

provision. 

(6) The Commission shall not make a determination granting an authorization under subsection 88(1), (5) or 

(8) in respect of a provision (not being a provision that is or may be an exclusionary provision) of a

proposed contract, arrangement or understanding, in respect of a proposed covenant, or in respect of 

proposed conduct (other than conduct to which subsection 47(6) or (7) applies), unless it is satisfied in all 

the circumstances that the provision of the proposed contract, arrangement or understanding, the proposed 

covenant, or the proposed conduct, as the case may be, would result, or be likely to result, in a benefit to 

the public and that that benefit would outweigh the detriment to the public constituted by any lessening of 

competition that would result, or be likely to result, if: 

(a) the proposed contract or arrangement were made, or the proposed understanding were arrived at, 

and the provision concerned were given effect to; 

(b) the proposed covenant were given, and were complied with; or 

American-Qantas Joint Application Exhibit 5
DETERMINATION 32 A91265 & A91266 

(c) the proposed conduct were engaged in; 

as the case may be. 

(7) The Commission shall not make a determination granting an authorization under subsection 88(1) or (5) in 

respect of a provision (not being a provision that is or may be an exclusionary provision) of a contract, 

arrangement or understanding or, in respect of a covenant, unless it is satisfied in all the circumstances that 

the provision of the contract, arrangement or understanding, or the covenant, as the case may be, has 

resulted, or is likely to result, in a benefit to the public and that that benefit outweighs or would outweigh 

the detriment to the public constituted by any lessening of competition that has resulted, or is likely to 

result, from giving effect to the provision or complying with the covenant. 

(8) The Commission shall not: 

(a) make a determination granting: 

(i) an authorization under subsection 88(1) in respect of a provision of a proposed contract, 

arrangement or understanding that is or may be an exclusionary provision; or 

(ii) an authorization under subsection 88(7) or (7A) in respect of proposed conduct; or 

(iii) an authorization under subsection 88(8) in respect of proposed conduct to which 

subsection 47(6) or (7) applies; or 

(iv) an authorisation under subsection 88(8A) for proposed conduct to which section 48 

applies; 

unless it is satisfied in all the circumstances that the proposed provision or the proposed conduct 

would result, or be likely to result, in such a benefit to the public that the proposed contract or 

arrangement should be allowed to be made, the proposed understanding should be allowed to be 

arrived at, or the proposed conduct should be allowed to take place, as the case may be; or 

(b) make a determination granting an authorization under subsection 88(1) in respect of a provision 

of a contract, arrangement or understanding that is or may be an exclusionary provision unless it 

is satisfied in all the circumstances that the provision has resulted, or is likely to result, in such a 

benefit to the public that the contract, arrangement or understanding should be allowed to be 

given effect to. 

(9) The Commission shall not make a determination granting an authorization under subsection 88(9) in

respect of a proposed acquisition of shares in the capital of a body corporate or of assets of a person or in 

respect of the acquisition of a controlling interest in a body corporate within the meaning of section 50A 

unless it is satisfied in all the circumstances that the proposed acquisition would result, or be likely to 

result, in such a benefit to the public that the acquisition should be allowed to take place. 

(9A) In determining what amounts to a benefit to the public for the purposes of subsection (9): 

(a) the Commission must regard the following as benefits to the public (in addition to any other 

benefits to the public that may exist apart from this paragraph): 

(i) a significant increase in the real value of exports; 

(ii) a significant substitution of domestic products for imported goods; and 

(b) without limiting the matters that may be taken into account, the Commission must take into 

account all other relevant matters that relate to the international competitiveness of any Australian 

industry. 

Variation in the language of the tests 

There is some variation in the language in the Act, particularly between the tests in sections 

90(6) and 90(8). 

American-Qantas Joint Application Exhibit 5
DETERMINATION 33 A91265 & A91266 

The Australian Competition Tribunal (the Tribunal) has found that the tests are not precisely the 

same. The Tribunal has stated that the test under section 90(6) is limited to a consideration of 

those detriments arising from a lessening of competition but the test under section 90(8) is not 

so limited.27

However, the Tribunal has previously stated that regarding the test under section 90(6): 

[the] fact that the only public detriment to be taken into account is lessening of competition does not mean that 

other detriments are not to be weighed in the balance when a judgment is being made. Something relied upon as a 

benefit may have a beneficial, and also a detrimental, effect on society. Such detrimental effect as it has must be 

considered in order to determine the extent of its beneficial effect.28

Consequently, when applying either test, the ACCC can take most, if not all, public detriments 

likely to result from the relevant conduct into account either by looking at the detriment side of 

the equation or when assessing the extent of the benefits. 

Given the similarity in wording between sections 90(6) and 90(7), the ACCC considers the 

approach described above in relation to section 90(6) is also applicable to section 90(7). Further, 

as the wording in sections 90(5A) and 90(5B) is similar, this approach will also be applied in the 

test for conduct that may be a cartel provision. 

Conditions

The Act allows the ACCC to grant authorisation subject to conditions.29

Future and other parties 

Applications to make or give effect to contracts, arrangements or understandings that might 

substantially lessen competition or constitute exclusionary provisions may be expressed to 

extend to: 

• persons who become party to the contract, arrangement or understanding at some time 

in the future30

• persons named in the authorisation as being a party or a proposed party to the contract, 

arrangement or understanding.31

Six- month time limit 

 

27

 Australian Association of Pathology Practices Incorporated [2004] ACompT 4; 7 April 2004. This view was 

supported in VFF Chicken Meat Growers’ Boycott Authorisation [2006] AcompT9 at paragraph 67. 

28

 Re Association of Consulting Engineers, Australia (1981) ATPR 40-2-2 at 42788. See also: Media Council 

case (1978) ATPR 40-058 at 17606; and Application of Southern Cross Beverages Pty. Ltd., Cadbury 

Schweppes Pty Ltd and Amatil Ltd for review (1981) ATPR 40-200 at 42,763, 42766. 

29 Section 91(3). 

30 Section 88(10). 

31 Section 88(6). 

American-Qantas Joint Application Exhibit 5
DETERMINATION 34 A91265 & A91266 

A six-month time limit applies to the ACCC’s consideration of new applications for 

authorisation32. It does not apply to applications for revocation, revocation and substitution, or 

minor variation. The six-month period can be extended by up to a further six months in certain 

circumstances. 

Minor variation

A person to whom an authorisation has been granted (or a person on their behalf) may apply to 

the ACCC for a minor variation to the authorisation.

33 The Act limits applications for minor 

variation to applications for: 

... a single variation that does not involve a material change in the effect of the authorisation.34

When assessing applications for minor variation, the ACCC must be satisfied that: 

• the proposed variation satisfies the definition of a ‘minor variation’ and 

• if the proposed variation is minor, the ACCC must assess whether it results in any 

reduction to the net benefit of the conduct. 

Revocation; revocation and substitution 

A person to whom an authorisation has been granted may request that the ACCC revoke the 

authorisation.35 The ACCC may also review an authorisation with a view to revoking it in 

certain circumstances.36

The holder of an authorisation may apply to the ACCC to revoke the authorisation and substitute 

a new authorisation in its place.37 The ACCC may also review an authorisation with a view to 

revoking it and substituting a new authorisation in its place in certain circumstances.38

 

32 Section 90(10A) 

33 Subsection 91A(1) 

34 Subsection 87ZD(1). 

35 Subsection 91B(1) 

36 Subsection 91B(3) 

37 Subsection 91C(1) 

38 Subsection 91C(3) 

American-Qantas Joint Application Exhibit 5
Exhibit 6: New Zealand Ministry of Transportation authorization letter, dated 27 

September 2011
American-Qantas Joint Application Exhibit 6
Exhibit 7: American-Qantas Codeshare Flights and Destinations

Jan. 

2011

Jan. 

2012

Jan. 

2013

Jan. 

2014

Jan. 

2015

% Increase (Jan. 

2015 v. Jan. 2011)

QantasAmerican

Codeshare 

Flights

3,672 4,157 4,462 4,609 4,870 33%

QantasAmerican

Codeshare 

Destinations

66 116 116 124 123 86%

Source: Carrier Filed Schedules. Selected parameters: Non-stop passenger flights, Qantas marketed, American 

operated, all destinations, Jan. 2011 to May 2015. Retrieved from www.diio.net on May 28, 2015.
Exhibit 8: Complementary Networks of American and Qantas

American Airlines service

Qantas Airways service

Source: Carrier Filed Schedules. Selected parameters: Non-stop passenger flights, Qantas operated/marketed, 

American operated/marketed, All destinations excluding Europe, Jun. 2015. Retrieved from www.diio.net on Jun. 4, 

2015.
Exhibit 9: Qantas Domestic and International Routes through Sydney

Qantas Domestic Routes through Sydney

Qantas Airways service

List of Destinations: Albury; Adelaide; Armidale; Alice Springs; Broome; Brisbane; Canberra; 

Coffs Harbour; Cairns; Dubbo City; Darwin; Hobart; Hamilton Island; Hervey Bay; Lord Howe 

Island; Melbourne; Moree; Gold Coast; Perth; Port Macquarie; Tamworth; Wagga Wagga; West 

Wellcamp

Source: Carrier Filed Schedules. Selected parameters: Non-stop passenger flights, Qantas operated/marketed, 

Australia domestic network to/from Sydney, Jun. 2015. Retrieved from www.diio.net on Jun. 4, 2015.
Qantas International Routes Through Sydney

Qantas Airways service

List of Destinations: Auckland; Bangkok; Jakarta; Christchurch; Dallas/Ft. Worth; Dubai; Hong 

Kong; Honolulu; Johannesburg; Los Angeles; Manila; New Caledonia; Queenstown; Tokyo; 

Shanghai; Santiago; Singapore; Wellington; Vancouver.

Source: Carrier Filed Schedules. Selected parameters: Non-stop passenger flights, Qantas 

operated/marketed, International destinations to/from Sydney excluding Europe, Jun. 2015. 

Retrieved from www.diio.net on Jun. 4, 2015.
Exhibit 10: Qantas Gateways Connecting to U.S. Destinations through American Hubs

Qantas Gateways Connecting to American U.S. Destinations

Qantas Airways service

Source: Carrier Filed Schedules. Selected parameters: Non-stop passenger flights, Qantas operated, Australia 

to/from U.S., Jun. 2015. Retrieved from www.diio.net on Jun. 4, 2015.
American Domestic Network via Los Angeles (LAX)

American Airlines service

Qantas Airways service

List of Destinations: Albuquerque; Aspen; Atlanta; Austin; Nashville; Boston; Charlotte; 

Columbus (OH); Washington (DCA); Denver; Dallas/Ft. Worth; El Paso; Eugene; Fresno; 

Washington (IAD); Houston (IAH); Indianapolis; New York (JFK); Las Vegas; Orlando; Miami; 

Monterey (CA); Oklahoma City; Chicago (ORD); Philadelphia; Phoenix; Pittsburgh; Redmond; 

Raleigh/Durham; Reno; Santa Fe; San Diego; San Antonio; San Francisco; San Jose; Salt Lake 

City; Sacramento; St. Louis; Tampa; Tucson; Northwest Arkansas

Source: Carrier Filed Schedules. Selected parameters: Non-stop passenger flights, Qantas operated/marketed 

Australia to Los Angeles AND American operated/marketed, Continental U.S. destinations from Los Angeles, Jun. 

2015. Retrieved from www.diio.net on Jun. 4, 2015.
American Domestic Network via Dallas/Fort Worth (DFW)

American Airlines service

Qantas Airways service

List of Destinations: Abilene; Albuquerque; Waco; Alexandria (LA); Amarillo; Aspen; Atlanta; 

Austin; Hartford; Birmingham (AL); Bismarck; Bloomington; Nashville; Boston; Beaumont 

(TX); Brownsville (TX); Baton Rouge; Baltimore; Columbia (SC); Chattanooga; Charleston 

(SC); Cedar Rapids; Cleveland; College Station; Charlotte; Columbus (OH); Champaign; 

Colorado Springs; Columbia (MO); Corpus Christi; Charleston (WV); Cincinnati; Dayton; 

Washington (DCA); Denver; Durango; Des Moines; Detroit; Vail; El Paso; Evansville; Newark; 

Fargo; Fresno; Ft. Lauderdale; Sioux Falls; Ft. Smith; Garden City (KS); Longview (TX); Grand 

Junction; Gulfport-Biloxi; Grand Island (NE); Killeen-Ft. Hood; Grand Rapids; Greensboro; 

Greenville (SC); Houston (HOU); Houston (IAH); Huntsville (AL); Washington (IAD); Wichita; 

Indianapolis; Jackson Hole; Jackson (MS); Jacksonville; New York (JFK); New York (LGA); 

Joplin; Las Vegas; Lawton (OK); Los Angeles; Lubbock; Lake Charles; Lexington; Lafayette 

(LA); Little Rock; Laredo; Midland (TX); Kansas City; Orlando; Memphis; McAllen; 

Montgomery; Manhattan (KS); Miami; Milwaukee; Moline/Quad Cities; Monroe (LA); Mobile; 

Madison; Minneapolis; New Orleans; Montrose; Oklahoma City; Omaha; Ontario; Chicago 

(ORD); Norfolk; West Palm Beach; Portland (OR); Philadelphia; Phoenix; Peoria; Hattiesburg; 

Pittsburgh; Pensacola; Palm Springs; Rapid City; Raleigh/Durham; Richmond; Reno; Roswell; 

Ft. Myers; Santa Fe; San Diego; San Antonio; Savannah; Louisville; Seattle; San Francisco; 

Springfield (MO); Springfield (IL); Shreveport; San Jose; San Angelo; Salt Lake City; 

Sacramento; Santa Ana; Wichita Falls; St. Louis; Tallahassee; Tampa; Tulsa; Tucson; 

Texarkana; Tyler (TX); Knoxville; Ft. Walton Beach; Northwest Arkansas

Source: Carrier Filed Schedules. Selected parameters: Non-stop passenger flights, Qantas operated/marketed 

Australia to Dallas/Fort Worth, American operated/marketed, Continental U.S. destinations from Dallas/Fort Worth, 

Jun. 2015. Retrieved from www.diio.net on Jun. 4, 2015.
Exhibit 11, American DFW Domestic and International Connections

American Airlines service

Qantas Airways service

Source: Carrier Filed Schedules. Selected parameters: Non-stop passenger flights, Qantas operated/marketed 

Australia domestic network, Qantas operated/marketed Australia to Dallas/Fort Worth, American 

operated/marketed, All destinations from Dallas/Fort Worth excluding Asia, Europe, Hawaii, Jun. 2015. Retrieved 

from www.diio.net on Jun. 4, 2015. 
Exhibit 12: Year-over-Year Qantas Passenger Traffic between Mainland U.S. and 

Australia

Passenger Traffic % Increase

Route 2010 2011 2012 2013 2014 '11 vs '10 '12 vs '11 '13 vs '12 '14 vs '13 '14 vs '11

LAX-SYD 439,371 456,982 457,249 480,360 475,915 4% 0% 5% -1% 4%

LAX-MEL 203,645 224,998 272,458 285,772 283,752 10% 21% 5% -1% 26%

BNE-LAX 188,147 187,625 183,467 185,961 210,867 0% -2% 1% 13% 12%

BNE-DFW 

&

DFW-SYD

- 67,609 166,499 186,022 199,861 - 146% 12% 7% 196%

TOTAL 831,163 937,214 1,079,673 1,138,115 1,170,395 13% 15% 5% 3% 25%

Source: U.S. Department of Transportation, Bureau of Transportation Statistics (2014). Air Carrier Statistics 

database (T-100 Segment data bank). Selected years, Jan. 2010 to Nov. 2014. Retrieved from www.diio.net. 

American Airlines internally adjusted MIDT data (2015). Selected month, Dec. 2014. 
Exhibit 13: Qantas Mainland U.S. to Australia ASMs and Seats, 2011 vs. 2014

Oct-11 Oct-14 Change % Change

Seats 95,716 129,075 33,359 35%

ASMs 730,159,474 997,991,413 267,831,939 37%

Source: U.S. Department of Transportation, Bureau of Transportation Statistics (2014). Air Carrier Statistics 

database (T-100 Segment data bank). Selected years, Jan. 2010 to Nov. 2014. Retrieved from www.diio.net.
Exhibit 14, Qantas Mainland U.S. to Australia Scheduled Seat Capacity

Scheduled Seats from Mainland U.S. to Australia Seats % increase year-over-year

Route

2010 

Total 

Seats

2011 

Total 

Seats

2012 

Total 

Seats

2013 

Total 

Seats

2014 

Total 

Seats

11 vs. 10 12 vs. 11 13 vs. 12 14 vs. 13 14 vs. 11

LAXSYD 601,748 606,014 597,750 611,232 613,482 1% -1% 2% 0% 1%

LAXMEL 300,036 308,508 328,500 344,480 353,568 3% 6% 5% 3% 15%

LAXBNE 239,552 254,524 242,704 236,615 263,858 6% -5% -3% 12% 4%

BNEDFW 

& DFWSYD

- 104,016 248,220 263,636 276,656 - 139% 6% 5% 166%

TOTAL 

ALL 

ROUTES

1,141,336 1,273,062 1,417,174 1,455,963 1,507,564 12% 11% 3% 4% 18%

Source: Carrier Filed Schedules. Selected parameters: Non-stop passenger flights, Qantas marketed, American 

operated, All destinations, Jan. 2011 to May 2015. Retrieved from www.diio.net on May 28, 2015.
Exhibit 15, LAX-SYD Seat Capacity Share by Carrier

LAX-SYD Seat Capacity Share by Carrier

Carrier YE 2010 YE 2011 YE 2012 YE 2013 YE 2014

Qantas 46% 45% 45% 46% 47%

UA 21% 20% 21% 20% 17%

VA 18% 20% 20% 19% 20%

DL 15% 15% 15% 15% 16%

Total LAXSYD 100% 100% 100% 100% 100%

Source: Carrier Filed Schedules. Selected parameters: Non-stop passenger flights, Qantas marketed, American 

operated, All destinations, Jan. 2011 to May 2015. Retrieved from www.diio.net on May 28, 2015.
Exhibit 16: Passenger Traffic on US to AU/NZ by Alliance

Passenger Traffic on all routes from Australia & New Zealand to 

US by Alliance % Increase

2010 2011 2012 2013 2014 '11 vs '10 '12 vs '11 '13 vs '12 14 vs '13 CAGR

oneworld 1,127,092 1,156,144 1,192,554 1,206,907 1,243,218 3% 3% 1% 3% 2%

Delta 

(SkyTeam)-

Virgin 

Australia

526,039 601,726 568,066 582,664 607,199 14% -6% 3% 4% 4%

Star 1,027,674 1,034,135 1,046,244 1,116,763 1,103,262 1% 1% 7% -1% 2%

Unaligned 178,161 250,062 335,872 510,345 536,102 40% 34% 52% 5% 33%

TOTAL 2,858,966 3,042,067 3,142,736 3,416,679 3,489,781 6% 3% 9% 2% 5%

Source: U.S. Department of Transportation, Bureau of Transportation Statistics (2014). Air Carrier Statistics 

database (T-100 Segment data bank). Selected years, Jan. 2010 to Nov. 2014. Retrieved from www.diio.net. 

American Airlines internally adjusted MIDT data (2015). Selected month, Dec. 2014. 
ADDITIONAL DOCUMENTS AND INFORMATION

To expedite the Department‘s consideration of this Joint Application, the Joint Applicants are 

providing the Department with additional information and documents typically requested by the 

Department for purposes of evaluating applications for antitrust immunity.

A. Document Production

American and Qantas are producing their Joint Business Management and Steering Committee 

presentations prepared in the ordinary course of business during the existence of the Original 

Joint Business, which was approved by the Department in 2011. 

American is also providing studies, surveys, analyses and reports which were prepared by or for 

any officer(s) or director(s) for the purpose of evaluating or analyzing the American/Qantas 

Restated Joint Business and the impact of the Restated Joint Business with respect to market 

shares, competition, competitors, markets, potential for sales growth or expansion into product or 

geographic markets. Qantas is conducting a search of its documents and intends to make an 

additional production.

American and Qantas are producing these materials in order to assist the Department in its 

review and approval of the antitrust immunity application.

These documents contain confidential proprietary information, and are being furnished pursuant 

to the Department‘s Rule 12 procedures. The Joint Motion for Confidential Treatment contains

complete indexes of the confidential document production.

B. Routes and Services between North America and Australia/New Zealand

The proposed scope of North America to/from Australia/New Zealand services under the

Restated JBA are summarized in Exhibit 3. The existing Trans-Pacific Routes currently flown 

between Mainland U.S. and Australia/New Zealand are shown at Exhibit 14. 

As described in the Application, the Parties intend to launch a new American-operated service on

LAX-SYD and a new Qantas-operated service SFO-SYD. The Parties also intend to launch 

additional new Trans-Pacific services within the next few seasons and are exploring the services 

which provide the best opportunities for the Parties‘ combined network. The Department‘s 

approval of this Application will allow the joint business to grow, continue to deliver these 

services in the future, and introduce additional future services.

American and Qantas will continue to adjust their schedules depending on market conditions and 

competitive opportunities. Similarly, the Parties will continue to optimize their use of equipment

type depending on competitive conditions.
C. Codeshare Partners

American is a codeshare partner with oneworld member airlines and places its code on flights 

operated by the following oneworld member airlines: 

airberlin

British Airways

Cathay Pacific

Finnair

Iberia

Japan Airlines

LAN Airlines

Malaysia Airlines

Qantas Airways

Qatar Airways

Royal Jordanian Airlines

S7 Airlines

TAM Airlines

US Airways

American also codeshares on the following additional airlines:

Air Tahiti Nui

Alaska Airlines / Horizon Air

Cape Air Airlines

Eithad Airways

Fiji Airways

Gulf Air

Hanian Airlines

Hawaiian Airlines

Interjet

Jetstar Airways

Jetstar Japan

Open Skies

Seaborne Airlines

WestJet

Qantas is a codeshare partner with the following oneworld member airlines:

American Airlines

British Airways

Finnair

Iberia

Japan Airlines

LAN Airlines

SriLankan Airlines
Qantas also codeshares on the following additional airlines:

Aircalin

Air China

Air Niugini

Airnorth

Air Tahiti Nui

Air Vanuatu

Alaska Airlines

Alliance Airlines

Asiana Airlines

Bangkok Airways

China Airlines

China Eastern Airlines

China Southern Airlines

Emirates

Fiji Airways

Jet Airways

Jetstar Asia

Jetstar Japan

Vietnam Airlines

WestJet

D. Alliances

Both American and Qantas have been members of the oneworld alliance since its inception in 

1999.

The members and members-elect of the oneworld alliance serve nearly 1,000 destinations with 

14,250 daily flights to 150 countries. The American/Qantas joint business primarily affects

South Pacific routes. Although the Proposed Alliance will be an integral part of oneworld, it will 

not significantly influence operations of other oneworld members, none of which operate 

competing U.S.-Australia/New Zealand service. oneworld will therefore continue to be well 

positioned to coordinate and optimize U.S.-Australia/New Zealand service to the benefit of its 

member carriers and their passengers.

In addition to American, oneworld has the following members that fly across the Pacific Ocean:

Qantas (which operates a hub in Sydney); Japan Airlines (which has hubs in Tokyo at Narita and 

Haneda and separately operates an immunized alliance with American); and Cathay Pacific 

(which operates a hub in Hong Kong).

Star has the following members that fly across the Pacific Ocean: Air New Zealand (which 

operates a hub at Auckland, and participates in an immunized alliance with United); United (has 

hubs at Narita and in Guam); ANA (which operates hubs in Tokyo at Narita and Haneda and 

separately operates an immunized alliance with United); Asiana (which operates hubs at Incheon 
and Gimpo (Seoul) and separately operates an immunized alliance with United); Air China 

(which operates hubs at Beijing, Chengdu, and Shanghai); Singapore Airlines (which operates a 

hub at Singapore Changi); EVA Air (which operates a hub at Taoyuan); Air Canada (which 

operates hubs at Toronto, Montreal, and Vancouver); and Thai Airlines (which operates hubs at 

Bangkok, Chiang Mai, Phuket, and Hat Yai).

SkyTeam has the following members that fly across the Pacific Ocean: Delta (which operates a 

hub at Narita); Korean Airlines (which operates a hub in Seoul and participates in an immunized 

alliance with Delta); China Airlines (which operates a hub at Taoyuan); and China Eastern 

(which operates hubs at Shanghai, Kunming Wujiaba, and Xi‘an Xianyang).

E. Other Antitrust-Immunized Relationships

American maintains antitrust immunity with British Airways, Iberia, Finnair and Royal 

Jordanian (Order 2010- 7-8, July 20, 2010), with LAN/LAN Peru (Order 2005-10-8, October 13, 

2005), and with Japan Airlines (Order 2010-11-10, November 10, 2010). The Department also 

previously approved the existing American/Qantas joint business without a grant of antitrust 

immunity (Order 2011-11-12, November 9, 2011). 

Qantas is currently a party to an alliance with Emirates in respect of their services between 

Australia and New Zealand, Europe, including the United Kingdom, the Middle East and 

Northern Africa. Its alliance with Emirates was authorized by the ACCC on March 27, 2013.

Jetstar is a vital part of the Qantas domestic and international operations. It operates low-cost, 

value based services in domestic Australia and to the following international destinations from a 

number of cities in Australia. Since its establishment in 2004, the Jetstar Group has evolved into 

a mature and successful low cost carrier with an expanded brand presence as follows:

 Domestic Australia and New Zealand services (operated by Jetstar Airways);

 International services from Australia to destinations in Asia, the Pacific and New Zealand 

(operated by Jetstar Airways); and

 Services within and between various countries in Asia under the Jetstar business model, 

operated by the following joint ventures:

o Jetstar Asia Airways Private Limited (Jetstar Asia) of which the Qantas Group has 

a 49% shareholding through its shareholding of Jetstar Asia‘s parent company, 

Newstar Investment Holdings Pte Ltd (a Singapore company) (Newstar), which is 

incorporated in Singapore and operates flights from Singapore to various 

destinations in Asia;

o Jetstar Pacific Airlines Joint Stock Aviation Company (Jetstar Pacific) of which 

the Qantas Group has a 30% shareholding. Jetstar Pacific is incorporated in 

Vietnam and operates flights within Vietnam and to Singapore and Bangkok;
o Jetstar Japan Co Ltd (Jetstar Japan) in which the Qantas Group has a 33% 

shareholding. Jetstar Japan is incorporated in Japan and began operating flights 

within Japan from July 2012 and internationally in early 2015; and

o Jetstar Hong Kong Limited (Jetstar Hong Kong) in which the Qantas Group and 

China Eastern each have a 331⁄3% shareholding. Jetstar Hong Kong proposes to 

operate flights from Hong Kong to China and various destinations in Asia, subject 

to regulatory approvals.

The ACCC authorized coordination between the Qantas Group and the various Jetstar branded 

joint ventures in December 2012.

In November 2014, Qantas and China Eastern sought authorization from the ACCC with respect

to a proposed Joint Cooperation Agreement. That application is currently under review by the 

ACCC. 

F. Exchange of Equity or Ownership Interests

The Proposed Alliance does not involve any exchange of equity or ownership interests. 

G. Hub Airports for American and Qantas

American Airlines and US Airways maintain hubs in Charlotte, Chicago, Dallas/Fort Worth 

(DFW), Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C.

Qantas operates a hub at Sydney.

The Joint Applicants request that the Department take official notice of published schedules for 

these hubs, pursuant to Rule 24 of the Department‘s Rules of Practice.

H. Competitive Access to Airport Facilities

While SYD is slot-controlled, slots are available and do not pose a material impediment to entry 

or expansion by other carriers. The U.S. gateways at DFW and LAX are not slot controlled.

I. Labor Issues

American believes that the Proposed Alliance raises no significant labor issues. Indeed, the Joint 

Applicants believe that the long-term impact of the transaction will be positive for all existing 

employees, and no significant impact on unionized employees is anticipated under the Proposed 

Alliance. 

J. Civil Reserve Air Fleet Commitments

Granting this Joint Application for antitrust immunity will have no impact on American‘s CRAF 

commitments.
K. Global Distribution Systems

The grant of antitrust immunity here should also cover the coordination of (1) the presentation 

and sale of the Joint Applicants‘ airline services in GDSs and (2) the operations of their 

respective reservations systems. The Department has previously determined to extend antitrust 

immunity to GDS activities. 

L. Duration of Approval and Immunity

The Joint Applicants request that the Department approve, and grant antitrust immunity for the 

Proposed Alliance for a period of at least five years, subject to resubmission of the agreements 

constituting the Proposed Alliance in five years.

M. Conditions

In addition to the CRS-related condition above, the Joint Applicants will accept the standard 

conditions that the Department has attached to previous grants of antitrust immunity relating to: 

(a) non-participation in certain IATA-related tariff coordination activities; (b) O&D survey data 

reporting requirements; (c) operation under a common brand or common name; and (d) the 

submission for prior review of subsequent subsidiary agreements implementing the Alliance 

Agreements.
CERTIFICATE OF SERVICE

I certify that, on June 9, 2015, I caused to be served a copy of the foregoing Joint

Application for Approval and Antitrust Immunity for Proposed Alliance of American Airlines,

Inc. and Qantas Airways Limited, by email upon those addressees listed below:

brian.hedberg@dot.gov (D epartmentof Transportation)

todd.homan@dot.gov (D epartmentof Transportation)

peter.irvine@dot.gov (D epartmentof Transportation)

laura.remo@dot.gov (D epartmentof Transportation)

brett.kruger@dot.gov (D epartmentof Transportation)

john.s.duncan@faa.gov (FederalA viation A dministration)

william.stallings@usdoj.gov (D epartmentof Ju stice)

dan.weiss@united.com (United)

steve.morrissey@united.com (United)

gmurphy@crowell.com (C ou nselforUnited)

sascha.vanderbellen@delta.com (D elta)

robert.land@jetblue.com (JetB lu e)

esahr@eckertseamans.com (C ou nselforJetB lu e)

dderco@eckertseamans.com (C ou nselforJetB lu e)

jhill@cooley.com (C ou nselforH awaiian)

perkmann@cooley.com (C ou nselforH awaiian)

jeremy.ross@alaskaair.com (A laska)

dheffernan@cozen.com (C ou nselforA laska)

jyoung@yklaw.com (C ou nselforSpirit)

dkirstein@yklaw.com (C ou nselforSpirit)

bob.kneisley@wnco.com (Sou thwest)

leslie.abbott@wnco.com (Sou thwest)

john.fredericksen@suncountry.com (Su n C ou ntry)

thomas.ting@suncountry.com (Su n C ou ntry)

matwood@cozen.com (C ou nselforFrontier)

slachter@cozen.com (C ou nselforFrontier)

rpommer@atlasair.com (A tlas)

anita.mosner@hklaw.com (C ou nselforUP S)

jennifer.nowak@hklaw.com (C ou nselforUP S)

cefelts@fedex.com (FedEx)

nssparks@fedex.com (FedEx)

kevin.montgomery@polaraircargo.com (P olar)

info@airlineinfo.com

_________________________

Abigail Donovan