BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

---------------------------------------

Joint Application of :

:

AMERICAN AIRLINES, INC. :

:

and :

: DOT-OST-2011-

QANTAS AIRWAYS LIMITED :

:

under 49 U.S.C. § 41309 for :

approval of Joint Business Agreement :

:

---------------------------------------

JOINT APPLICATION OF AMERICAN AIRLINES, INC. AND QANTAS AIRWAYS 

LIMITED FOR APPROVAL OF JOINT BUSINESS AGREEMENT

Communications with respect to this document should be sent to:

For American Airlines: For Qantas Airways:

VIRASB VAHIDI BRETT JOHNSON

Senior Vice President – General Counsel

Marketing and Planning ANNA PRITCHARD

and Chief Commercial Officer Head of Legal – Competition 

American Airlines, Inc. Qantas Airways Limited

P.O. Box 619616, MD 5634 203 Coward Street

DFW Airport, TX 75261 Mascot New South Wales 2020

Australia

KENJI C. HASHIMOTO 61 (2) 9691 5515

Vice President – annapritchard@qantas.com.au

Strategic Alliances 

American Airlines, Inc.

P.O. Box 619616, MD 5635

DFW Airport, TX 75261

WILLIAM K. RIS, JR.

Senior Vice President –

Government Affairs

American Airlines, Inc.

1101 17th Street, NW

Washington, DC 20036
ROBERT A. WIRICK

Director, Regulatory Affairs

American Airlines, Inc.

P.O. Box 619616, MD 5635

DFW Airport, TX 75261

(817) 963-0394

robert.wirick@aa.com

R. BRUCE WARK

Associate General Counsel

JAMES K. KALEIGH

Antitrust Attorney

American Airlines, Inc.

P.O. Box 619616, MD 5675

DFW Airport, TX 75261

(817) 967-3458

james.kaleigh@aa.com

CARL B. NELSON

Associate General Counsel

American Airlines, Inc.

1101 17th Street, NW

Washington, DC 20036

(202) 496-5647

carl.nelson@aa.com

June 7, 2011
TABLE OF CONTENTS

INTRODUCTION ........................................................ 2

I. THE PROPOSED ALLIANCE WILL CREATE SIGNIFICANT PUBLIC BENEFITS .... 4

 A. The JBA’s Stated Objective Is To Create Consumer Benefits ..... 5

 B. Specific Consumer Benefits Arising Out Of The JBA ............. 6

 1. Improved Network And Scheduling ............................ 6

 2. Lower Fares And New Fare Products. ......................... 8

 3. More Efficient Corporate Travel Procurement ................ 9

 4. Frequent Flyer Improvements ............................... 10

 5. Increased Vacation Travel To Australia .................... 10

II. THE PROPOSED JBA WILL NOT REDUCE COMPETITION IN ANY MARKET ..... 11

 A. Global ....................................................... 12

 B. U.S. – South Pacific ......................................... 13

 C. U.S. - Australia ............................................. 14

 1. V Australia ............................................... 16

 2. Delta ..................................................... 16

 3. Star Alliance (United/Air New Zealand) .................... 17

III. JBA APPROVAL IS NECESSARY FOR THE JOINT APPLICANTS TO PROCEED . 19

IV. OTHER APPROVAL ISSUES, CONDITIONS, AND INFORMATION ............ 21

 A. Trans-Pacific Routes ......................................... 21

 B. Trans-Pacific Carriers Within The Three Alliances ............ 21

 C. Codeshare Routes ............................................. 22

 D. Relationship To oneworld ..................................... 22

 E. Hub Airports ................................................. 22

 F. Significant Service And Equipment Changes .................... 23

 G. Impact On Revenue ............................................ 23

 H. U.S. Labor Issues ............................................ 23

 I. Computer Reservations Systems ................................ 23

 J. Civil Reserve Air Fleet ...................................... 23

 K. Resubmission of Alliance Agreements .......................... 24

CONCLUSION ......................................................... 24
BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

---------------------------------------

Joint Application of :

:

AMERICAN AIRLINES, INC. :

:

and :

: DOT-OST-2011-

QANTAS AIRWAYS LIMITED :

:

under 49 U.S.C. § 41309 for :

approval of Joint Business Agreement :

:

---------------------------------------

JOINT APPLICATION OF AMERICAN AIRLINES, INC. AND QANTAS AIRWAYS 

LIMITED FOR APPROVAL OF JOINT BUSINESS AGREEMENT

American Airlines, Inc. (along with its affiliates American Eagle 

Airlines, Inc. and Executive Airlines, Inc., d/b/a American Eagle) and 

Qantas Airways Limited (along with its affiliate Jetstar Airways Pty 

Limited) (collectively the “Joint Applicants” or “Parties”) apply 

under 49 U.S.C. § 41309 for approval of a Joint Business Agreement 

(“JBA”), which is attached as Exhibit 1. The JBA will result in 

increased integration between the Parties and provide oneworld with 

the ability to further integrate its network, offering consumers a 

stronger competitive alternative to the Star and SkyTeam alliances. 

The Joint Applicants seek to implement the JBA upon receiving 

Department of Transportation approval. 

While carriers would ordinarily seek antitrust immunity under 49 

U.S.C. § 41308 in addition to approval of their agreement under 49 

U.S.C. § 41309, the Joint Applicants are not requesting ATI here in 

light of the existing lack of competition between American and Qantas
2

and the inability of American to operate its own service to the South 

Pacific (Australia and New Zealand).1 As the Department recently 

stated in tentatively approving and immunizing the Delta/Virgin Blue 

alliance, “when airlines request a grant of immunity, they must be 

able to demonstrate that their proposed alliance will produce 

substantial benefits that are not otherwise possible unless their 

request is granted” (Order 2011-5-8, May 10, 2011 (emphasis added)). 

The JBA between American and Qantas will produce substantial 

benefits that can lawfully be implemented without ATI. The Joint 

Applicants nonetheless seek Department approval of the JBA under 49 

U.S.C. § 41309, which provides that an air carrier or foreign air 

carrier may file an agreement which shall be approved “when the 

Secretary finds it is not adverse to the public interest and is not in 

violation of this part.” As we will demonstrate, the JBA is in the 

public interest and merits expedited approval. 

INTRODUCTION

The Joint Applicants seek approval of a new joint venture that 

will allow them to compete more effectively with the Star and SkyTeam 

alliances for traffic between the U.S. and the South Pacific. Star 

members United and Air New Zealand have enjoyed the benefits of 

antitrust immunity since 2001 (Order 2001-4-2, April 3, 2001). 

SkyTeam member Delta has entered into a joint venture agreement with 

Virgin Blue and V Australia2 (Joint Application, DOT-OST-2009-0155, 

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1 American currently lacks aircraft to serve the South Pacific. 

Moreover, under the terms of its labor agreements, American is precluded from 

operating nonstop services on the stage lengths for U.S.-South Pacific 

services.

2

 The Virgin Blue Group was started in Australia in 2000. Since that 

time, it has grown from a single aircraft type domestic operation to a 
3

July 9, 2009). On December 10, 2009, the Australian Competition and 

Consumer Commission (ACCC) approved the Delta/Virgin Blue alliance, 

concluding that the proposed coordination would allow the SkyTeam 

carriers to compete more vigorously and effectively with other 

carriers and alliances. On May 10, 2011, by Show Cause Order 2011-5-

8, the Department tentatively approved the Delta/Virgin Blue agreement 

and granted ATI. 

Approval of the American/Qantas JBA will foster inter-alliance 

competition and create significant consumer benefits without any 

reduction of competition in any market. American ceased operating its 

own U.S. to Australia service in 1992, nearly 20 years ago. American 

does not operate any service to the South Pacific and as noted above 

is unable to do so with its current fleet of aircraft and because of 

labor agreements.3 Thus, it is unlikely that in the foreseeable future 

American would be a competitor of Qantas on U.S.-Australia/New Zealand 

routes. However, given the risk and cost of defending against private 

antitrust claims (even if meritless), the Joint Applicants are 

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

domestic short-haul, international medium-haul, and international long-haul 

carrier with 87 aircraft. In May 2011, the Virgin Blue Group was rebranded 

the Virgin Australia Group. While the Virgin Blue brand is positioned as a 

domestic Australian carrier, the focus of the V Australia brand is long-haul 

international service working with its U.S. partner Delta. 

3 American has six Boeing 777-300 aircraft on order with expected 

delivery dates in 2012 and 2013. While these aircraft have a range of 

approximately 9,000 miles, they will not be configured or delivered anytime 

in the immediate future. Nor does any plan exist to use these assets to 

serve Australia/New Zealand. The aircraft to be delivered are not yet 

committed to particular routes, and given that American is currently short on 

long range aircraft to serve its existing routes, American will be carefully 

considering where these assets will be deployed and how they will be 

configured. In any event, the terms of American’s current collective 

bargaining agreement with the Allied Pilots Association would not permit 

service to Australia/New Zealand. That agreement contains a 14:30 flight 

time limitation. According to block times published by Qantas, service from 

Sydney to Los Angeles has an elapsed time of 14:35 to 15:00 depending on 

equipment type flown. Service from Sydney to Dallas/Fort Worth has an 

elapsed time of 15:25. 
4

understandably cautious about proceeding with their joint venture 

without Departmental approval under 49 U.S.C. § 41309. Indeed, the 

JBA requires government approval as a condition precedent to 

implementation (JBA ¶ 2.1(a)). 

As we show below, the American/Qantas JBA is in the public 

interest and the Joint Applicants meet the statutory requirements for 

approval under 49 U.S.C. § 41309. 

I. THE PROPOSED ALLIANCE WILL CREATE SIGNIFICANT PUBLIC BENEFITS

Under 49 U.S.C. § 41309(b), the Department “shall approve [an 

international alliance agreement] when the Secretary finds it is not 

adverse to the public interest.” Approval in this case is fully 

consistent with the public interest because the JBA will enable the 

Joint Applicants to undertake efficiency-enhancing coordinated 

activities, will foster alliance competition, and will generate 

consumer benefits.

The Joint Applicants have entered into the JBA in order to expand 

and deepen their coordination, expand and develop their network reach, 

and enhance their ability to compete with Star and SkyTeam. The JBA 

is necessary because American’s network at present does not extend to 

Australia and New Zealand at all, while Qantas’ U.S. presence is 

limited to Los Angeles and just three other U.S. gateway cities.4 

Thus, without closer coordination, oneworld customers would lack the 

same opportunity for integrated alliance service between the U.S. and 

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 4 Qantas operates 45 round trip flights per week between Australia/New 

Zealand and the U.S. Of these, 34 are to Los Angeles. Its other U.S. 

gateways are Dallas/Fort Worth (recently added), New York (via Los Angeles),

and Honolulu (also serviced by Jetstar).
5

the South Pacific that Star already has with United and Air New 

Zealand, and that SkyTeam will soon have with Delta and V Australia.

A. The JBA’s Stated Objective Is To Create Consumer Benefits

The JBA’s stated objective is “to maximise consumer benefits and 

operate cost effective and efficient networks by coordinating [the 

Parties’] activities and operations in relation to the JB Flights” 

(JBA ¶ 3.3). These consumer benefits include:

“(a) improving schedules, stop-over choices, 

frequencies and connection times on the JB 

Flights and all services operated by the 

parties which connect with the JB Flights;

(b) expanding connecting services at primary 

gateways leading to more one-stop online 

points of service;

(c) developing new fare products and 

promotions, offering a high quality, 

competitive product for consumers on JB 

Flights as a result of synergies arising 

from the parties’ cooperation; 

(d) improving coordination of use of airport 

facilities by expanding reciprocal airport 

lounge access, developing joint lounges in 

certain airports, improving facilities 

within lounges, and streamlined check-in 

facilities for passengers on JB Flights;

(e) easing airport transfers for connecting 

passengers on JB Flights;

(f) increasing opportunities for frequent 

flyers who are members of one party’s 

frequent flyer program to earn and/or 

redeem frequent flyer points when 

travelling on the other party;

(g) increasing the international 

competitiveness of both parties;

(h) easing the planning of itineraries through 

the provision of better information to 

agents;

(i) improving holiday/vacation products; and
6

(j) offering a single, cohesive product to 

corporate clients and consumers of the JB 

Flights” (JBA ¶ 3.3).

These consumer benefits will be achieved because the JBA creates 

joint integration and efficiencies that do not generally follow from 

standard codesharing or other arm’s-length arrangements. The need for 

such coordination to achieve these benefits has been recognized by the 

Department in numerous antitrust immunity cases.5

Here, while the Parties are not seeking ATI, the JBA will enable 

the Joint Applicants to more closely coordinate and improve their 

product offerings between the U.S. and the South Pacific. The JBA is 

also designed to maximize incentives to grow trans-Pacific traffic by 

means of services, sales, and marketing initiatives for the benefit of 

the joint venture as a whole, thereby creating stronger inter-alliance 

competition with Star and SkyTeam.

B. Specific Consumer Benefits Arising Out Of The JBA

1. Improved Network and Scheduling

The JBA will allow the Joint Applicants to improve “schedules, 

stop-over choices, frequencies and connection times on the JB Services 

and all services operated by the Parties which connect with the JB 

Services” (JBA ¶ 3.3(a)). 

Qantas operates 45 weekly flights between Australia/New Zealand 

and the U.S. Qantas’ primary U.S. gateway is Los Angeles, where it 

operates 34 weekly flights to destinations in Australia, 14 nonstop to 

Sydney, 14 to Melbourne (seven nonstop and seven via Auckland), and 

six to Brisbane. Los Angeles is a “cornerstone” city for American. 

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 5

 See, e.g., Star Alliance, Show Cause Order 2006-12-17, December 19, 

2006, at 18 (“[d]ue to the nature of Star’s commercial arrangements and plans 

to integrate new members . . . many of these public benefits are likely to be 

attributable to a grant of antitrust immunity”).
7

At LAX, American and American Eagle operate nearly 1,000 weekly 

flights to 38 destinations in North America. American is focusing its 

operations at its cornerstone cities, and the ability to coordinate 

with Qantas will allow American to further expand its service from LAX 

to other destinations given the benefit of network flow.6

On May 16, 2011, Qantas launched nonstop service from Sydney to 

Dallas/Fort Worth (with a stop in Brisbane in the return direction) 

four days a week using 307 seat Boeing 747-400ER aircraft. Dallas/Fort 

Worth is American’s largest domestic hub and a cornerstone city. From 

DFW, American and American Eagle operate nearly 700 daily flights to 

184 destinations worldwide, including multiple connections to 

American’s other cornerstones in Los Angeles, Chicago, Miami, and New 

York. Qantas’ new DFW-Australia route is supported by QF* codeshare 

service (operated by American or American Eagle) beyond DFW to 36 

destinations across North America (the U.S., Canada, and Mexico). In 

total, Qantas will have 105 codeshare routes in North America. Under 

the existing relationship between American and Qantas, there is no 

coordination of schedules or capacity. The Department’s approval of 

the JBA will provide the opportunity for the Joint Applicants to 

reduce transit times for consumers by coordinating of schedules.

At the South Pacific end, there are five new AA* codeshare routes 

from Brisbane and a new American codeshare relationship with Jetstar,7

further expanding American’s network reach with connections to a total 

of 13 destinations in Australia/New Zealand. 

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 6

 American estimates that 61% of Qantas passengers currently flying into 

Los Angeles travel to beyond destinations in the U.S., Canada, and Mexico. 

7 Wholly-owned by Qantas, Jetstar is a low-cost carrier offering domestic 

service in Australia and international service focused on leisure 

destinations.
8

Deeper cooperation between American and Qantas under the JBA will 

also lead to improved demand forecasting, prompt identification of 

market opportunities, and enhanced ability for growth through the 

addition of routes and frequencies.

2. Lower Fares and New Fare Products

As the Department is aware, close cooperation of the kind 

envisioned by the JBA between American/Qantas has been shown to result 

in lower fares, as well as a more seamless product for consumers. The 

JBA will enable the development of new fare products and lower fares 

for consumers travelling between the U.S. and Australia/New Zealand. 

Through joint initiatives such as simplifying the zonal structure8 used 

to determine fares to destinations within the U.S. and creating new 

“Walkabout” multi-sector passes, the Parties will enhance the product 

offerings available directly to consumers and through travel agents.

Under the proposed simplification of zonal pricing, the current 

six zones will be reduced to three. This refined structure will be 

easier to manage and communicate to consumers, and is anticipated to 

drive higher passenger volume with fare reductions for 64% of U.S. 

destinations as well as expanded stop-over options at gateway cities. 

Fare reductions of up to $700 are proposed for some of the most 

popular destinations in the U.S.

The JBA will also allow the introduction of a “Walkabout Pass” for 

passengers travelling to the U.S. from Australia/New Zealand on Qantas 

and connecting to QF* codeshare flights operated by American or 

American Eagle. Using the Walkabout Pass, a passenger can purchase a 

single fare that allows for travel across multiple segments without 

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 8 Under the zonal structure, an add-on fare is coupled with the transPacific fare to determine the applicable fare to many interior markets.
9

regard to circuitry rather than purchasing individual fares for each 

sector that is flown. Under the JBA, American and Qantas will also 

offer U.S. consumers an Australia pass.

Through the JBA, the Joint Applicants will have the ability to 

plan and provide preferential availability (increased access to lower 

fare inventories). This will enhance the zonal pricing structure by 

ensuring broader availability of discounted fares across a broader 

travel period. 

In addition to nonstop flights between the U.S. and the South 

Pacific, the JBA will enable American and Qantas to develop and 

promote fare products for multi-stop itineraries across a range of 

destinations to meet the needs of passengers in a way not currently 

facilitated by oneworld’s multi-sector products. These itineraries 

could include services between the U.S. and Australia via Asia or 

Europe.

3. More Efficient Corporate Travel Procurement

Corporate customers are increasingly seeking the simplicity and 

convenience of a single contract with maximized alliance-based 

discounts. SkyTeam and Star already leverage their extensive 

immunized relationships to incentivize corporate customers to deal 

with the member carriers in their respective alliances. The JBA will 

enable oneworld to better provide these benefits to corporate 

customers and compete on an inter-alliance basis. 

The Joint Applicants plan to develop a joint strategy to better 

serve their corporate customers by drawing on the carriers’ respective 

experience and perspective. The JBA will enable American and Qantas 

to develop joint fare products for large corporations as well as 
10

small-to-medium enterprises and provide incentives for the Parties to 

use their home point-of-sale strengths to promote and distribute these

products. 

4. Frequent Flyer Improvements

The JBA provides incentives for the Joint Applicants to expand 

recognition of each other’s frequent flyers and to offer enhanced 

products and services that are typically reserved for own-program 

members, such as priority boarding, upgrades and more generous baggage 

allowances. This will benefit the Parties’ customers and make the 

loyalty programs of both carriers more competitive. The JBA also 

provides incentives for the Parties to maximize the respective 

strengths of both membership bases to conduct joint marketing 

programs, generating more traffic for the joint network. This benefit 

will not be possible absent the new deeper relationship under the JBA.

5. Increased Vacation Travel to Australia

Approximately half a million visitors from the U.S. arrive in 

Australia each year. This number, however, has remained stagnant for 

almost a decade and presents the opportunity for potential growth. 

Coordination between the Parties on flights under the JBA will provide 

a new platform for promoting U.S. leisure travel to Australia. 

For example, AAVacations is an award-winning tour operator that 

offers complete travel packages as well as hotels, rental cars and 

activities. While AAVacations has packages to 320 destinations around 

the world, historically it has offered little land product in Australia 

and has not aggressively promoted Australia as a destination.
11

In tandem with the JBA coordination on flights,9 Qantas’ extensive 

Australian expertise and infrastructure will allow AAVacations to 

develop a comprehensive range of Australia/New Zealand vacation 

offerings and actively market them to U.S. consumers. 

II. THE PROPOSED JBA WILL NOT REDUCE COMPETITION IN ANY MARKET

The only exception to the requirement of 49 U.S.C. § 41309 that 

the Department shall approve agreements in the public interest is 

where the proposed cooperation “substantially reduces or eliminates 

competition.” Here, the JBA has no potential to reduce or eliminate 

competition since American does not compete with Qantas.

In evaluating alliance applications, the Department uses “the 

Clayton Act test, which is used to predict the competitive effects of 

a proposed merger” (Star Alliance, Show Cause Order 2009-4-5, April 7, 

2009, at 7). 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 

timely, likely, and sufficient either to deter or counteract a 

proposed alliance’s potential for harm” (Id.). Here, there can be no 

reduction in competition as a result of the JBA given American’s lack 

of service to Australia/New Zealand, much less a “substantial” 

reduction. 

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 9 The addition of the new Dallas/Fort Worth service will increase the 

opportunities in the U.S. for tourism in Australia. 
12

 Further, the U.S.-Australia Open Skies Agreement has led to new 

entry by carriers such as Delta and V Australia and will give 

consumers on both sides of the Pacific the benefits of integrated 

networks and increased capacity.10

A. Global

The addition of a U.S.-South Pacific joint venture to oneworld’s 

network will expand consumer choice and enhance competition in the 

global marketplace. Star and SkyTeam have had joint ventures 

operating in the U.S.-Europe market for some time, and integrated 

operations across the North Pacific as well. oneworld is finally 

poised to catch up to its two rivals with the American/British 

Airways/Iberia and American/JAL joint business agreements that the 

Department approved and immunized last year. However, it is important 

that the oneworld global network does not fall behind Star and SkyTeam 

across the South Pacific, where Star already has a significant network 

advantage given its immunized alliance with Air New Zealand and 

SkyTeam has received tentative approval and ATI for the Delta/Virgin 

Blue joint venture.11

Integration between American and Qantas under the JBA will give 

consumers more travel options, shorter travel times and reduced fares 

and will likely accelerate the introduction of new capacity on transPacific routes. 

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 10 As a further example, Strategic Airlines recently filed an application 

requesting that the Department issue a foreign carrier permit to enable 

Strategic, consistent with the U.S.-Australia Open Skies Agreement, to 

operate service between Australia and the U.S. (Application for Foreign Air 

Carrier Permit and Exemption, DOT-OST-2011-0106, June 3, 2011). 11 In fact, Delta and Virgin Blue cited increased competition from Qantas’ 

“oneworld partnership with American” as a reason why those two carriers had 

formed their joint venture and were seeking antitrust immunity (Joint 

Application, DOT-OST-2009-0155, July 9, 2009, at 31).
13

Together, the Joint Applicants will account for a very small 

percentage of the global network market, and oneworld as a whole is 

the smallest of the three global alliances. Approval of the JBA will 

not result in any reduction in global competition.

B. U.S.-South Pacific

The proposed alliance will enhance competition and expand 

consumer choice for air transportation services between the U.S. and 

the South Pacific. Australia and New Zealand are at the core of this 

region, and travel to the two countries has become highly competitive 

as a result of open skies agreements between the U.S. and both 

Australia and New Zealand. 

The proposed alliance will have zero impact on booking shares, as 

American operates no service to the South Pacific.12 Moreover, there 

would be three strong competitors from the U.S. to the South Pacific: 

United/Air New Zealand, Delta/V Australia and American/Qantas. In 

these circumstances, it is clear that the JBA will not reduce U.S.-

South Pacific competition.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 12 In theory, American could route Australia/New Zealand passengers on its 

own flights from the U.S. to Honolulu or Tokyo in order to earn a higher 

prorate payment, but the time penalty associated with connecting in HNL or 

NRT renders such service non-competitive with the nonstops offered by Qantas, 

United, Air New Zealand, Delta and V Australia.
14

U.S.-SOUTH PACIFIC BOOKINGS AND SHARES

(MIDT Unadjusted, 2009-2010)

CARRIER 2009 2010

PAX BOOKINGS % PAX BOOKINGS %

Qantas 565,270 41% 575,502 37%

United 271,526 20% 285,771 18%

Air New Zealand 252,275 18% 258,414 16%

V Australia 97,678 7% 192,573 12%

Delta 45,848 3% 98,536 6%

Hawaiian Airlines 39,414 3% 53,257 3%

Air Pacific 20,224 1% 22,212 1%

Other 76,191 6% 87,397 6%

TOTAL 1,368,426 1,573,662

Note: V Australia and Delta did not operate U.S.-South Pacific service prior 

to 2009. 

C. U.S.-Australia

U.S.-Australia traffic is more competitive now than ever before. 

Trans-Pacific travel between the U.S. and Australia generally involves 

nonstop flight segments of over 7,500 miles and requires specialized 

long-range aircraft. Due to the distances involved, there are only a 

few city pairs that support nonstop service. However, market share 

data and route capacity information13 demonstrates the increasing 

levels of competition on those city pairs where such service is 

available: 

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 13 See Exhibit 2.
15

U.S.-AUSTRALIA BOOKINGS AND SHARES 

(MIDT Unadjusted, 2009-2010)

CARRIER 2009 2010

PAX BOOKINGS % PAX BOOKINGS %

Qantas 490,048 46% 506,726 40%

United 259,820 24% 276,386 22%

V Australia 91,345 9% 175,979 14%

Delta 45,574 4% 97,894 8%

Air New Zealand 68,618 6% 62,007 5%

Hawaiian Airlines 39,318 4% 53,189 4%

Other 70,645 7% 85,900 7%

TOTAL 1,065,368 1,258,081

Note: V Australia and Delta did not operate U.S.-South Pacific service prior 

to 2009. Booking and share data from 2007-2010 has been provided in the 

Qantas Airways/American Airlines Joint Business Agreement, Applications for 

Authorization, Submission to the ACCC, May 11, 2011, at 53 (available at 

http://www.accc.gov.au/content/index.phtml/itemId/987619/fromItemId/278039/di

splay/application).

American accounted for only 2.5% of the 1,258,081 passenger 

bookings between the U.S. and Australia in 2010. American does not 

operate its own service to Australia (or New Zealand), but is a 

marketing codeshare participant with limited sales presence and 

recognition. Further, over the past four years, Qantas’ market share 

has diminished in all U.S.-Australia city pairs as a result of 

increased competition.14 This trend can be expected to continue in 

light of the Delta/Virgin Blue joint venture.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 14 Data provided by Qantas indicates that Qantas’ booking share has 

steadily declined from 57% in each successive year since 2007. See Qantas 
16

1. V Australia

V Australia’s operations between Australia and the U.S. were 

progressively rolled out through 2009. In February 2009, V Australia 

commenced operations on the Sydney to Los Angeles route and now offers 

daily service with 361-seat Boeing 777-300ER aircraft. In April 2009, 

V Australia launched three flights a week from Brisbane to Los 

Angeles. In November 2009, these routes were supplemented with 

Melbourne to Los Angeles two times a week, increasing to three times a 

week in December 2010. In total, V Australia now has 13 flights per 

week between Australia and the U.S. It has four Boeing 777-300ERs in 

its fleet and three more scheduled for future delivery.

In less than two years of full operation, V Australia has become 

the third largest carrier between the U.S. and Australia by passenger 

bookings, with a 14% share in 2010. 

This rapid expansion of market share demonstrates the degree of 

penetration available to a new entrant on the trans-Pacific. At the 

end of 2010, V Australia represented 17% of nonstop seat capacity 

between Sydney and Los Angeles, 24% of capacity between Melbourne and 

Los Angeles and 33% of capacity between Brisbane and Los Angeles. See

Exhibit 2. More recent 2011 data suggest even further increases in V 

Australia’s capacity.15

2. Delta 

When Delta’s joint venture with Virgin Blue proceeds, the 

combined entity will be the second largest U.S.-Australia carrier as 

measured by booking share serving U.S.-Australia. Delta/V Australia 

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Airways/American Airlines Joint Business Agreement, Applications for 

Authorization, Submission to the ACCC, May 11, 2011, at 53. 15 See Qantas Airways/American Airlines Joint Business Agreement, 

Applications for Authorization, Submission to the ACCC, May 11, 2011, at 64.
17

will hold a combined capacity share between Los Angeles and Sydney of 

around 40%. See Exhibit 2.

Delta began nonstop service between Los Angeles and Sydney in 

July 2009 and currently operates seven flights a week using Boeing 

777-200LR aircraft. In less than two years since its entry, Delta now 

accounts for 8% of all passenger bookings between the U.S. and 

Australia. In April 2011 Delta represented 8% of seat capacity on 

nonstop flights between the mainland U.S. and Australia including 15% 

of capacity on nonstop flights between Los Angeles and Sydney. See

Exhibit 2.

3. Star Alliance (United/Air New Zealand)

United has been operating South Pacific service for 25 years. 

United operates 14 weekly flights between the U.S. and Australia 

consisting of daily flights to Sydney from both Los Angeles and San 

Francisco. United is the second largest carrier by passenger bookings 

on U.S.-Australia routes with a 22% share in 2010. United has 

maintained this share over the past three years despite the entry of V 

Australia and Delta. United’s Vice President for the Pacific has said 

that “We know how to hold our own and we are certainly going to fight 

for our position in the Australian market... we are going to hold our 

shares in this market, make no mistake about that” (The Australian,

“Battle over the Pacific Hots Up - United vows to fight as V Australia 

starts LA Flights,” 2/27/2009). 

At the end of 2010, United accounted for 31% of seat capacity on 

nonstop flights between the mainland U.S. and Australia including 63% 

of capacity on nonstop flights between San Francisco and Sydney and 

36% of capacity between Los Angeles and Sydney. See Exhibit 2. 
18

United’s key competitive strength is the connections it provides to 

customers traveling beyond Los Angeles and San Francisco throughout 

United’s extensive domestic U.S. network. United has more domestic 

flights from each of Los Angeles and San Francisco than any other 

carrier. United’s network expanded substantially with the Continental 

merger in the fourth quarter of 2010. The combined company has 10 

hubs, including hubs in the four largest cities in the U.S. With this 

extensive footprint, United/Continental possesses a leading domestic 

and international network, with marketing by a powerful single sales 

force. 

United/Continental is already building a stronger presence in the 

South Pacific with Continental’s proposed introduction of daily Boeing 

787 service from its Houston hub to Auckland in 2012. The new route 

will benefit from connecting traffic at both ends, including 

throughout North America, Europe, and Australia. United has also 

recently retrofitted its long haul Boeing 747-400 fleet by installing

lie-flat business class seats and increasing the number of seats in 

the economy cabin. 

United and Air New Zealand are members of the Star Alliance. 

United codeshares on Air New Zealand’s flights between Auckland and 

Sydney, Brisbane and Melbourne, and on Air New Zealand’s trans-Pacific 

flights to Los Angeles and San Francisco. Via Auckland, Air New 

Zealand accounts for 5% of passenger bookings between Australia and 

the U.S. It operates 18 weekly flights between New Zealand and the 

mainland United States, with 12 nonstop flights between Auckland and 

Los Angeles (plus one flight via the Cook Islands) and five nonstop 

flights between Auckland and San Francisco. Air New Zealand is able 
19

to provide unlimited direct service by combining rights established 

under the U.S.-New Zealand, U.S.-Australia, and Australia-New Zealand 

open skies agreements. 

Even though Qantas is the largest Australian carrier, its 40% 

share of the U.S.-Australia market is far less than the 70% share that 

was held by United/Air New Zealand when that alliance was approved in 

2001 (Order 2001-3-4, March 2, 2001, at 12). Moreover, in that case 

there was an actual reduction in the number of competitors.16 Here, 

Qantas and American do not compete on U.S.-Australia/New Zealand

routes. This lack of competition, coupled with the new competition 

introduced by U.S.-Australia open skies, guarantees that the JBA will 

not result in any competitive harm on routes between the U.S. and this 

region. 

III. JBA APPROVAL IS NECESSARY FOR THE JOINT APPLICANTS TO PROCEED

The JBA expressly requires approval from the Department, as well 

as authorization from competition regulators in Australia and New 

Zealand, as a condition precedent to implementation (JBA ¶ 2.1(a)). 

As to why American and Qantas, with no overlapping operations, 

would need Department approval of the JBA to proceed, one need look no 

further than the class action antitrust bar for the answer. Case 

reporters abound with meritless class action antitrust claims filed 

against airlines. While most of these claims are dismissed on summary 

judgment, the airlines are still forced to spend millions of dollars 

in legal fees defending themselves. As a recent example, the 

United/Continental merger, which has been cleared by the U.S. 

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 16 At the time their alliance was approved, United and Air New Zealand 

both operated Los Angeles-Auckland, with booking shares of 28% and 40% 

respectively (Order 2001-3-4, at 12).
20

Department of Justice, has been subjected to meritless antitrust 

litigation (See, e.g., Joel Rosenblatt, Continental CEO Smisek Defends 

Proposed United Merger In Lawsuit On Tie-Up, Bloomberg, August 31, 

2010).

Indeed, last month the Federal District Court for the Northern 

District of California considered claims of illegal coordination among 

carriers operating international flights between the U.S. and 

Asia/Oceania. The alleged unlawful conduct in this case, In re TransPacific Passenger Air Transport Antitrust Litigation, included 

coordination arising out of the existence of a codeshare agreement 

(Memorandum and Order Granting In Part and Denying In Part Motions to 

Dismiss, Case No. C07-05634, N.D. Cal. May 9, 2011). The plaintiff’s 

complaint charged that “Defendants’ participation in various codesharing agreements and professional alliances ‘reinforce and 

facilitate the conspiracy’” (Id. at 17), and that “many of the 

Defendants and non-defendant co-conspirators are participants in a 

multitude of independent code-sharing arrangements. . . . These codesharing agreements blur the line between partner and competitor” 

(Id.). As demonstrated by this recent decision, the potential risk of 

antitrust litigation simply from participation in a lawful codeshare 

agreement is a real threat. Even if the claims are meritless, the 

cost of defending against such suits is high. 

Approval of the JBA, even without antitrust immunity, would help 

dissuade groundless litigation. Accordingly, the Department should 

approve the American/Qantas JBA under 49 U.S.C. § 41309. 
21

IV. OTHER APPROVAL ISSUES, CONDITIONS, AND INFORMATION

The Joint Applicants hereby provide the following additional 

information. 

A. Trans-Pacific Routes

The trans-Pacific routes flown to the U.S. by Qantas are 

identified in Exhibit 3. Qantas anticipates that it will continue 

serving these routes after the JBA is approved. Qantas will continue 

to adjust its schedules depending on market conditions and competitive 

opportunities.

B. Trans-Pacific Carriers Within The Three Alliances

Star has four trans-Pacific members. Air New Zealand has ATI 

with United and operates a hub in Auckland. United and ANA both 

operate a Narita hub and have ATI with the other. Asiana has ATI with 

United and operates a hub in Seoul. Continental, now merged with 

United, also operates a hub in Guam. 

SkyTeam has two trans-Pacific members. Delta operates a hub at 

Narita and Korean Airlines, which has ATI with Delta, operates a hub 

in Seoul. Delta also has proposed a joint venture, tentatively 

approved by Order 2011-5-8, with V Australia, which operates a hub 

with Virgin Blue in Sydney. In addition, China Eastern will become a 

SkyTeam member on June 21, 2011. 

oneworld has four trans-Pacific members, including: Qantas 

(which operates a hub in Sydney), the American/JAL joint venture 

(which has hubs in Tokyo at Narita and Haneda and ATI), and Cathay 

Pacific/Dragon Air (which operates a hub in Hong Kong).
22

C. Codeshare Routes 

The current international codeshare agreements of the Joint 

Applicants are listed in Exhibit 4.

D. Relationship To oneworld

The proposed American/Qantas JBA includes two of oneworld’s 

trans-Pacific members and will primarily affect South Pacific markets. 

Although the American/Qantas joint venture 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 

service. oneworld will therefore be well positioned to coordinate and 

optimize U.S.-Australia/New Zealand service to the benefit of its 

member carriers and their passengers.

oneworld’s current members are American, British Airways, Cathay 

Pacific, Finnair, Iberia, Japan Airlines, LAN, Malev, Mexicana,17

Qantas, and Royal Jordanian. American has separate 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). 

It is also possible that American, JAL, and Qantas could seek to 

merge their joint ventures into a single agreement. 

E. Hub Airports

American operates hubs at Dallas/Fort Worth, Chicago O’Hare, and 

Miami, which along with Los Angeles and New York are cornerstone 

cities. Qantas operates a hub at Sydney.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 17 Mexicana has ceased operations as a result of its adverse financial 

position.
23

F. Significant Service And Equipment Changes

American and Qantas have not finalized any schedule changes to be 

made after the JBA is approved and implemented. They may adjust their 

schedules in the future depending on market conditions and 

opportunities presented by the competitive environment.

G. Impact On Revenue

The JBA is an integral element of each carrier’s global network 

ambitions. American and Qantas anticipate that the development and 

expansion of their joint venture will generate additional traffic and 

revenue, enhance operating efficiencies, and have a positive impact on 

system profitability.

H. U.S. Labor Issues

American believes that the transaction raises no significant 

labor issues. American and Qantas will remain independent. No 

significant impact on unionized employees is anticipated under the 

JBA. The applicants believe that the long-term impact of the 

transaction will be positive for all existing employees for new job 

creation.

I. Computer Reservations Systems

Consistent with Department precedent, the Joint Applicants 

request that approval of the JBA encompass the presentation and sale 

of their services in computer reservations systems and the operation 

of their internal reservations systems.

J. Civil Reserve Air Fleet

The JBA between American and Qantas will have no impact on 

American’s CRAF commitments.
24

K. Resubmission Of Alliance Agreements

The Joint Applicants will accept the Department’s general 

condition requiring the carriers “to resubmit for review their 

Alliance Agreements five years from the data of issuance of the final 

order” (Order 2002-11-12, at 18).

CONCLUSION

The American/Qantas JBA is in the public interest and will not 

result in any reduction or elimination of competition. Because 

American does not provide its own service to Australia/New Zealand 

there can be no anticompetitive effect from the JBA.18 The increased 

integration between the Parties will allow oneworld to provide a 

stronger competitive alternative to the Star and SkyTeam alliances and 

deliver other substantial benefits to consumers. Accordingly, the 

Joint Applicants respectfully request expedited approval of their 

proposed JBA.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 18 Indeed, it is for this reason that the Joint Applicants do not seek 

antitrust immunity – the JBA could lawfully be implemented without a grant of 

immunity. But, given the risk and cost of defending against private 

antitrust claims, the Parties seek the Department’s approval of the JBA

under 49 U.S.C. § 41309.

PUBLIC VERSION

EXHIBIT 1












































PUBLIC VERSION

EXHIBIT 2
PUBLIC VERSION

EXHIBIT 2: ROUTE CAPACITY DATA

DECEMBER 2010

City Pair Carrier Frequency* Seats** Seat Share

LAX - SYD Qantas 14 22,506 35%

United 14 23,188 36%

V Australia 7 10,830 17%

Delta 7 8,070 12%

TOTAL 42 64,594

LAX - MEL Qantas 7 11,749 76%

United

V Australia 2 3,610 24%

Delta

TOTAL 9 15,359

LAX - BNE Qantas 6 10,233 67%

United

V Australia 3 5,054 33%

Delta

TOTAL 9 15,287

SFO - SYD Qantas 4 6,822 37%

United 7 11,594 63%

V Australia

Delta

TOTAL 11 18,416

Notes for Exhibit 2: 

* Weekly each way.

** Total monthly each way.

Source: OAG data.
PUBLIC VERSION

DECEMBER 2009

City Pair Carrier Frequency* Seats** Seat Share

LAX - SYD Qantas 14 24,397 44%

United 7 11,594 21%

V Australia 7 11,191 20%

Delta 7 8,339 15%

TOTAL 35 55,521

LAX - MEL Qantas 7 12,388 79%

United

V Australia 2 3,249 21%

Delta

TOTAL 9 15,637

LAX - BNE Qantas 6 9,475 67%

United

V Australia 3 4,693 33%

Delta

TOTAL 9 14,168

SFO - SYD Qantas 4 6,443 36%

United 7 11,594 64%

V Australia

Delta

TOTAL 11 18,037
PUBLIC VERSION

DECEMBER 2008

City Pair Carrier Frequency* Seats** Seat Share

LAX - SYD Qantas 16 26,506 70%

United 7 11,594 30%

V Australia

Delta

TOTAL 23 38,100

LAX - MEL Qantas 7 12,246 66%

United 4 6,358 34%

V Australia

Delta

TOTAL 11 18,604

LAX - BNE Qantas 6 9,854 100%

United

V Australia

Delta

TOTAL 6 9,854

SFO - SYD Qantas 5 8,338 43%

United 7 11,220 57%

V Australia

Delta

TOTAL 12 19,558

TOTAL Qantas 34 56,944 66%

United 18 29,172 34%

V Australia

Delta

TOTAL 52 86,116
PUBLIC VERSION

DECEMBER 2007

City Pair Carrier Frequency* Seats** Seat Share

LAX - SYD Qantas 16 26,530 65%

United 9 14,212 35%

V Australia

Delta

TOTAL 25 40,742

LAX - MEL Qantas 7 11,749 100%

United

V Australia

Delta

TOTAL 7 11,749

LAX - BNE Qantas 5 8,717 100%

United

V Australia

Delta

TOTAL 5 8,717

SFO - SYD Qantas 5 8,717 43%

United 7 11,594 57%

V Australia

Delta

TOTAL 12 20,311

TOTAL Qantas 33 55,713 68%

United 16 25,806 32%

V Australia

Delta

TOTAL 49 81,519
PUBLIC VERSION

EXHIBIT 3

QANTAS TRANS-PACIFIC ROUTES TO U.S.

Brisbane – Los Angeles

Brisbane – Dallas/Fort Worth

Sydney – Los Angeles

Sydney – New York (JFK) 

Sydney – Dallas/Fort Worth

Sydney – Honolulu

Melbourne – Los Angeles

Auckland – Los Angeles
PUBLIC VERSION

EXHIBIT 4
International Codeshare Agreements of Joint Applicants

Air Berlin AB Air Caledonie SB

Air Nostrum YW Air France AF

British Airways BA Air Niugini PX

Cathay Pacific CX Air Pacific FJ

Etihad Airways EY Air Tahiti Nui TN

EVA Airways BR Air Vanuatu NF

Finnair AY Alaska Airlines AS

Iberia IB American Airlines AA

JAL Express JC Asiana Airlines OZ

Japan Airlines JL British Airways BA

Jet Airways India 9W Cathay Pacific CX

Jetconnect QF* China Eastern MU

Jetstar Airways JQ EVA Airways BR

Kingfisher IT Finnair AY

LAN Airlines LA Horizon Air QX

LAN Argentina 4M Iberia IB

LAN Express LU Japan Airlines JL

LAN Peru LP Jet Airways India 9W

MALEV Hungarian Airlines MA Jetconnect QF*

Niki Airlines HG Jetstar Airways JQ

Qantas Airways QF Kenya Airways KQ

Royal Jordanian RJ LAN Airlines LA

GOL Airlines G3 MALEV Hungarian Airlines MA

WestJet WS South African Airways SA

Vietnam Airlines VN

American Airlines (AA) Qantas (QF)