Qantas alliance given green light

Qantas has upped the competitive ante on Air NZ by forging a closer alliance with American Airlines. Photo / Brett Phibbs

Air New Zealand has failed to block Qantas expanding its alliance with American Airlines in an interim deal.

The Australian Competition and Consumer Commission has granted interim authorisation to Qantas and American Airlines to introduce more joint services between Australia and the United States.

"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.

Air New Zealand had been the only objector to interim approval.

It said in its submission it was inappropriate to grant interim authorisation without a full and considered analysis by the commission.

Qantas and AA already had authorisation to co-ordinate on designated routes under the original JBA which is valid to June 2016, it said.

The strengthened alliance represents a threat to Air New Zealand's stranglehold on direct flying across the Pacific.

American Airlines is investigating flying from Auckland to the United States.

Qantas said today it was "thrilled" by the decision which will allow to start booking direct flights to San Francisco for travel from December 18, 2015.

Qantas International chief executive Gareth Evans said feedback from customers since it announced the expansion of the alliance had been fantastic.

"They are thrilled we are returning to San Francisco, which is the most popular onward destination for Qantas' customers travelling to the US."

Qantas' flights to San Francisco are made possible by American Airlines starting a direct daily Sydney-Los Angeles service from December.

Today's decision also allows Qantas to begin selling new codeshare services operated by American Airlines on the Sydney-Los Angeles route using a Boeing 777-300ER aircraft.

"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," Evans said.

Interim authorisation is not indicative of whether or not final authorisation will be granted.

The alliance between Qantas and American Airlines was first authorised by the ACCC in September 2011 for 5 years.

Authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act.