After failing to get their joint venture company off the ground in 2016, American Airlines Group Inc and Qantas Airways Ltd have finally gotten the approval of the US government. The US Department of Transportation announced this week that it has granted tentative approval for a joint venture business agreement between the two airlines.
The approval will grant a tentative antitrust immunity for the soon-to-be-established joint venture business that will cover international services. American Airlines and Qantas Airways both applied for a joint venture business in 2016, which would have covered the United States, New Zealand, and Australia. Unfortunately, the application was rejected by the Obama administration.
The joint venture agreement would allow both companies to combine and coordinate their various business offerings. This would include planning, sales, routes, pricing, and their respective frequent flyer programs. The agreement would result in new flight options and services for customers.
Both airlines are reportedly planning to add three new routes within the first two years of the operation of the new joint venture business. Existing routes will also reportedly be expanded once the business is established.
According to American Airlines CEO Doug Parker, the new joint business will be able to provide a lot of advantages to the airline industry. The new business should create hundreds of new jobs within both companies and it should greatly improve the services both companies currently provide.
American Airlines also announced that they expect a final decision for the joint venture in the coming weeks. Both companies have apparently been required by the transportation agency to provide a self-assessment report for the joint venture business, which will include a study on the impact on competition in next seven years after it is established.
The report will then be submitted to the government agency for deliberation, which will hopefully be followed by a final decision.
Meanwhile, Australia and New Zealand have already approved the first application for the joint venture business. American Airlines and Qantas Airways submitted their second application attempt to the US transportation agency in February of last year.
Both airlines threatened to cancel their services if the agency would reject their application again, stating that the joint venture business would provide up to $310 million annually in untapped consumer benefits. American Airlines and Qantas Airways also argued that the venture would actually lead to lower fares and higher capacities for both services. This would eventually lead to other carriers responding with their own improvements, which will benefit consumers in the end.
