ACCC grants interim authorisation for expanded Qantas-AA alliance

The Australian Competition and Consumer Commission (ACCC) has granted Qantas and American interim authorisation for the tie-up, which has been expanded to include Qantas’s return to San Francisco and the start of American’s new Sydney-Los Angeles service with its own Boeing 777-300ERs.

“The ACCC considers that granting interim authorisation is likely to lead to additional capacity on the Sydney to Los Angeles route, and increased capacity and competition on the Sydney to San Francisco route,” ACCC Commissioner Jill Walker said in a statement on Thursday.

“This is likely to result in benefits to passengers that wish to use these services. Further, granting interim authorisation is unlikely to have any permanent impact on the market that could not be reversed in the event final authorisation is not granted.”

Although Qantas and American had an existing alliance that the ACCC approved in September 2011 for five years, the pair sought reauthorisation of a new agreement that included a revenue-sharing component to reflect American’s entry on trans-Pacific routes with its own metal and Qantas’s return to San Francisco.

In a submission to ACCC, Air NZ had called on the regulator to deny interim authorisation, arguing there was no compelling reason for it to be granted.

The ACCC said interim authorisation was not indicative of whether or not final authorisation would be granted.

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Qantas said schedules and fares for both its Sydney-San Francisco service (due to start December 18) and American’s Los Angeles-Sydney flights (taking off December 19) would be available in the coming weeks.

Qantas International chief executive Gareth Evans said the feedback from customers on the return to San Francisco has been very positive and welcomed the ACCC’s interim authorisation.

“Our corporate customers in particular have told us they look forward to saving about four hours each way by not having to connect through Los Angeles,” Evans said in a statement.

The ACCC said it would proceed to preparing its draft determination, with a decision expected in August/September.

Meanwhile, Qantas and American had also applied to the US Department of Transportation for approval of the expanded alliance.