Qantas threatens to cancel Dallas A380 if AA JV fails to get US nod
By David Flynn, February 27 2018
Qantas is waving a big stick in its second attempt to have a joint venture with Oneworld partner American Airlines approved by the United States Department of Transport, saying it "may be forced to reduce the frequency of, downgauge or potentially cancel its A380 service between Sydney and Dallas/Fort Worth" should the deal be scuppered a second time.
Likewise, according to a statement issued by both airlines, "American may further reduce its services between Los Angeles and Sydney and Auckland. These routes rely on codeshare support from each airline’s feeder network via their respective hub cities to be economically viable.
The US airline originally promised a year-round daily service from Auckland to Los Angeles, with Qantas providing the necessary trans-Tasman legs, but later scaled this back to a seasonal route running for only six months of the year during "the peak winter travel season from the US,” according to American Airlines Australia and New Zealand general manager Simon Dodd.
Last year also saw American has also wound back its Sydney-Los Angeles flight from a Boeing 777-300ER with the airline's flagship first class suites to the smaller Boeing 787-9 Dreamliner which tops out at business class.
Qantas also pulled its QF codeshare from those flights and slashed the number of frequent flyer point and status credits earned by Qantas passengers travelling on AA, attributing the decisions to efforts to “scale back areas of cooperation that aren’t viable without immunity."
Both moves were seen as a winding back of American’s presence in the Australian market following the US DoT's rejection of a proposed revenue-sharing joint venture with Qantas in late 2016 on he grounds that the airlines would together control as much as 60% of nonstop capacity between the U.S. and Australia.
An immunized venture would "substantially" reduce or eliminate competition on several levels and create an opportunity for American and Qantas to exclude future rivals from the market, the government said.
Second time lucky..?
The new application to the DoT outlines an expanded alliance on trans-Pacific routes, with both airlines hoping the incumbent Republican government will look more favourably on the proposal than its Democratic predecessor.
The Australian Competition and Consumer Commission (ACCC) has previously authorised the joint venture for five years from February 2016, but stateside approval remains the sticking point.
A take-two tick from the DoT would allow Qantas and American Airlines to co-ordinate pricing on tickets sold on outbound fares from the US to Australia under the shield of anti-trust immunity.
Qantas predictably spruiks the joint business as one which will "significantly improve service, stimulate demand and unlock more than $300 million annually in consumer benefits that are not achievable through any other form of cooperation."
Extended codesharing between the Qantas and American Airlines networks would "open more connections to more destinations," with "a wider range of fare classes across each other’s networks, including lower fares and discounts."
A further carrot in this arrangement is a promise that "the planned arrangement will also give American and Qantas the opportunity to introduce additional routes between the US and Australia and New Zealand, including new city pairings."
This could include new Qantas Boeing 787-9 routes from Brisbane to Dallas or Chicago.
David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.
Qantas - Qantas Frequent Flyer
20 Mar 2014
Total posts 131
What is the deadline for the 'nod'? I have a SYD>DFW flight booked in April 2018.I trust this will still be in place in 6 weeks time???!!!
19 Jan 2018
Total posts 87
QF is just bluffing (with a royal flush). That route is so profitable, even without the AA JV in place, it’s utterly inconcievable they would downgauge or cancel it.
Qantas
01 Jun 2016
Total posts 28
I am not that confident about profitability. This month, I travelled to Dallas from Sydney ...and more than half the Economy seats were empty, only the business class seats were full
Qantas - Qantas Frequent Flyer
29 Jul 2013
Total posts 203
@rstephenp if the Business Class cabin is full they don't need to fill all those Economy seats. There's a great deal more profit per seat up the front (or rather up the top in the case of the A380).
04 Feb 2018
Total posts 3
Mate the premium classes is where an airline makes most of its profit, so it makes perfect sense according to your comment that the SYD-DFW flights are profitable.
24 Aug 2011
Total posts 1208
I understand that QF and AA have to put spin on this but surely the JV is all about profits and cost savings. There is nothing wrong with that. I fail to see how it affects pax either way. If there is market demand for a service, it will happen. The JV allows QF/AA to co-ordindate pricing and cost share. It doesn't really offer the pax anything and is practically invisible to them. Without the JV, the services would probably still occur with codeshares or within Oneworld interlining.
Qantas - Qantas Frequent Flyer
28 Sep 2012
Total posts 131
They service DFW with their biggest plane because it's the only one they have which currently is (was pre 789) able to fly that route direct each way... And I'm assuming better economics than the previous 744
Qantas - Qantas Frequent Flyer
10 Dec 2014
Total posts 43
Syd-DFW is only possible with AA feed, otherwise it is a dud. That’s their point
24 Aug 2011
Total posts 1208
They remain Oneworld partners whether there is a JV or not. Full interline connectivity is offered regardless so they would still get AA feed. It's just that the pricing and revenue sharing would be standard interline arrangement. As I said, pax wouldn't know the difference. If anything, the JV will increase the price the pax pays.
Qantas - Qantas Frequent Flyer
12 Jan 2017
Total posts 23
My experience with the BA/AA/IB/AY agreement trans-Atlantic is that I get a lot more choice on flight combinations, and I'm now paying less for LHR/JFK ¦ EWR flights than what I was pre-JV. I've also found that if I'm willing to utilise less busy airports as transit for my final destination, the fares are substantially cheaper than 5 years ago.
Granted there isn't the same volume of passengers betweenEast Coast Aust / West Coast US to give as many options, nor city pairings to utilise smaller airports. However a JV could open up the likes of smaller AA hubs like PHX to take some of the weight away from LAX.
19 Jan 2018
Total posts 87
You say that you don’t see how it effects pax, then proceed to note the JV allows QF and AA to coordinate pricing. That’s exactly how it effects pax: higher pricing thanks to their combined market dominance.
20 Feb 2012
Total posts 66
The problem as I understand it is that now Qantas doesn't codeshare on the AA flight. Which means if they approved the JV I reckon there would be 100 extra passengers simply from the codeshare.
Air New Zealand - Airpoints
12 Jul 2016
Total posts 27
See you later AA - if you cant make it pay..goodbye
15 Feb 2018
Total posts 43
There is something wrong here. Other airlines, namely United and Air New Zealand, can make the Houston route work, so why would any airline even consider dropping the Dallas service? I personally have flown the Dallas route, and find it very convenient to connect in Dallas to where I want to go in the US. This would be a mistake on Allan Joyce’s part.
24 Aug 2011
Total posts 1208
It's a threat, chances are the route will remain regardless.
23 Feb 2015
Total posts 260
Approval will guarantee a worse customer experience (higher fares). Non-approval MAY cause a worse customer experience (fewer services).
Qantas - Qantas Frequent Flyer
04 Aug 2016
Total posts 13
This might explain the delay in announcing the next Dreamliner route ex Brisbane??. I understand it was due to be announced late last year or early this year with the shortlist being Chicago, Seattle or Dallas. If the JV is not approved, maybe this will increase likelihood of Seattle being chosen or San Francisco.
Virgin Australia - Velocity Rewards
06 Sep 2012
Total posts 231
Brisbane - Seattle is a small market. If the JV falls through, Brisbane to San Francisco is the more likelier option.
22 Jan 2018
Total posts 99
Agree! Way more opportunity flying to sf or Chicago
Jetstar Airways - Qantas Frequent Flyer
23 May 2017
Total posts 17
Be good to get the Virgin take on this.
QF
04 Apr 2014
Total posts 209
And the US DOT worries how? Let’s count the carriers they’ve been willing to let die in the vine. I doubt a couple of routes going by the wayside would keep them awake for 5 minutes.
15 Feb 2018
Total posts 43
I believe that DFW will remain. I see when a few more 787’s are in operation,
20 May 2015
Total posts 579
"SYD, MEL and BNE will all have 787’s operating to DFW"
Is the 787-9 capable of getting to DFW without having to block seats?
Qantas - Qantas Frequent Flyer
26 May 2014
Total posts 464
Does the “brochure range” apply to Qantas’s A380s? I thought Airbus increased the MTOW after Qantas deliveries were complete.
04 Mar 2015
Total posts 17
Qantas - Qantas Frequent Flyer
22 Jul 2015
Total posts 219
I hope not. Much prefer to fly to DFW than the zoo which LAX can be. Nice easy airport to get around and 3.5 hours to La Guardia when I head off to NY.
15 Feb 2018
Total posts 43
I agree with you Otternz. Air New Zealand and United would fill the void very quickly. The reason Qantas has the major share of the US routes, are that on any given day, a minimum of two (often three) A380’s fly the route. Most other operators use the much smaller 787. And Qantas wants to pull one of the worlds biggest planes from the route. Clearly, if Allan Joyce is true to his word, he shouldn’t be in charge of Qantas.
Qantas
19 Apr 2012
Total posts 1430
Red Cee the point that AJ made was to cancel the 'A380 service'. He would over time replace it with 2 789s (from Melb and Syd) as they have the legs to do the trip more easily (and with a greater passenger load on the return journey with the current set up) than the A380. This would not be until the early 2020s though when they get more 789s. The discussion is really about a new hub in Chicago with a AA tie up from later this year, or gradually moving DFW to 789s, starting later this year from Bris but from 2021 or so from Sydney/Melb. A Bris move later this year may reduce Sydney flights to say five per week
07 Mar 2014
Total posts 11
Huffing and puffing by Qantas, DoT must be really scared
24 Apr 2017
Total posts 80
Really makes no sense. people flying SYD to DFW aren't interested in a stop in AKL. Qantas can do the flight on their own or not.
26 Aug 2012
Total posts 44
Interesting to see in the formal documentation that BNE-DFW and SYD-ORD are shown in route distance comparisons. These the only routes in the table not currently operating. Suggests that these could be the next 787-9 routes coming up.
25 Feb 2017
Total posts 25
And yet 2 Star Partner UA and LH Code share have more than 60% of the USA to Germany market and nobody says a word
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