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Melbourne : The Australian Competition and Consumer Commission has issued a draft determination proposing to re-authorize Qantas and American Airlines to continue to coordinate their operations on trans-Pacific routes for a further five years. Under the alliance, the airlines propose to continue coordination in respect of marketing and sales, freight, pricing, scheduling, distribution strategies including agency arrangements, yield and inventory management, frequent flyer programs, lounges, joint procurement, and product and service standards.

The ACCC stated that this alliance would result in continued public benefits for passengers travelling between Australia and the US through enhanced products and services including new frequencies and destinations, more online connections, better scheduling, greater loyalty program benefits and improved lounge access. The alliance is also likely to promote competition between other airlines that provide services on trans-Pacific routes. The alliance, in ACCC’s opinion, is unlikely to result in any significant public detriment, largely because the ACCC accepts that American Airlines would be unlikely to introduce its own trans-Pacific services in the absence of its alliance with Qantas.

The ACCC previously granted authorisation to Qantas and American Airlines on 29 September 2011. The ACCC also granted interim authorisation in July 2015 to facilitate the introduction of two new alliance services from December 2015. Now, with the alliance in place, American Airlines would begin a service operating between Sydney and Los Angeles, and Qantas will begin a service operating between Sydney and San Francisco.

Authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act (2010). Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment. ACCC is seeking submissions from interested parties in relation to its draft determination, before making a final decision. Submissions could be finalised by next month.