American, Qantas denied more time to make trans-Pacific submission

by Steve Creedy - editor
November 28, 2016

American Airlines and Qantas will not be allowed additional time to respond to a US Department of Transportation decision to deny permission for an expanded trans-Pacific alliance.

In a sign the DoT is taking a hard line on the issue, it refused a joint request by the airlines to extend the deadline for comments on its November 18 tentative decision not to grant the partners anti-trust immunity from December 2 to December 20. The airlines also asked for the deadline for answers to their comments be extended to December 30.

Their request came after the  DoT issued a show cause notice seeking submissions on its decision to deny the carriers anti-trust immunity after finding the alliance would harm competition.

The airlines had applied to expand their joint business agreement to a full alliance similar to the one Qantas has with Gulf carrier Emirates that would allow them to operate “metal neutral’’ joint flights alongside each other.

This would allow them to coordinate functions such as scheduling, network planning, sales, customer services and capacity decisions, something the carriers argue would allow them to more effectively compete across the Pacific and expand services.

In its latest letter,  the department said the carriers  had offered no compelling reason to alter the response schedule and it did not see any.

It said the facts and issues involved had been well developed and argued by -argued al issues involved have been well developed and argued by the parties to the  proceeding, including the applicants.

It also dismissed a claim by the airlines that they needed more time to consider the reasoning and analysis behind the decision as well as  the potential implications for their businesses.

“ We find these arguments unpersuasive,’’ the department said.  “The underlying issues and facts, and accordingly the reasoning and analysis, are relatively straightforward, and the show-cause order raised no issues that have not been obvious during the course of the proceeding.

“Moreover, any implications for the applicants’ business interests have always been inherent in the possibility of denial of the application, a possibility that always exists until a final decision in any proceeding of this kind.

“Given our decision here, we find that the need for resolution of this issue outweighs any benefit of awaiting answers to the motion.

“Accordingly, we deny this motion, and are acting with dispatch to remove any ambiguity with regard to the procedural schedule for the benefit of the applicants and other parties alike, giving them the maximum amount of time to prepare their submissions. ‘’

American signalled last week it would object to the proposed decision against the alliance, which has been given the green light by regulators in Australia and New Zealand.

“This represents a significant departure from prior DOT decisions, which have long recognized the pro-competitive benefits of combining complementary international networks,’’ it said at that time.

“Other airlines have the significant competitive advantage of antitrust immunity in the U.S.-Australasia market. With the same opportunity, American and Qantas will be able to compete more effectively and increase consumer benefits in the market.’’