American Airlines Group Inc (NASDAQ:AAL) and QANTAS AIRWAYS (OTCMKTS:QUBSF) have filed an application seeking to attain the US regulatory approval for an antitrust immunity for a joint venture that would enable them harmonize their ticket prices and schedules on flights to and from the popular tourist destinations. The two companies have warned to abandon their transportation services if they are rejected given that this is the second attempt they are applying for a nod from the regulators.
The first application for the joint venture that would wrap up all regions in the US, Australia and New Zealand was declined in 2016 by the Department of Transportation during the Obama regime over the claims that the joint venture would bring unfavorable competition and consumer choice in the US and Australia market. However, the counterpart regulators in both Australia and New Zealand approved the first application for the collaboration before the US rejected the proposal.
Since Trump has promised to boost the US transport industry through deregulation and hands-off to the anti-trust enforcement, the proposed joint business has high hopes that the government would consider their application.
However, If rejected, Qantas has vowed to reduce its frequency, downgrade or cancel its A380 services on the Sydney-Dallas/Fort Worth route, while the American Airline would cut off services on its popular Los Angeles and Sydney/Auckland route.
Currently, the two airlines highly depend on the existing code-share contracts to ensure the routes are economically viable. The current agreement enables the two firms to carry out cross-marketing of flights and their passengers are allowed to connect between the two airlines using a single itinerary.
If the partnership proposal is successfully approved, the two firms would expand the services to cities that are not currently served by either of the two airlines.
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According to Qantas, if approved, the mutual business would notably enhance customer service, increase demand, and unlock the potential consumer benefits that are currently not attainable through the existing agreements.