DOT Slaps Qantas for Violating Obscure U.S. Law

The U.S. Department of Transportation has fined Australian airline Qantas as much as $125,000 for breaking rules governing which passengers may fly on its New York to Los Angeles route.

Qantas’ daily Boeing 747 flight is among the most unusual in the United States. Travelers can board in New York and transfer in Los Angeles to other Qantas flights to Sydney, Melbourne and Brisbane.

Many countries, including the United States, prohibit cabotage, or the practice of a foreign-controlled airline selling tickets on purely domestic flights. The laws are designed to protect U.S. carriers from a foreign airline stealing its customers, and they’re the reason Emirates probably will never compete with American Airlines from New York to San Francisco.

But since Qantas customers are merely stopping in L.A., and not getting off there, its route is not considered cabotage.

Qantas has had the route for years without issues. But in 2015 and 2016, rather than just selling the New York leg to customers booked on Qantas, it allowed passengers flying two other long-haul airlines to buy it.

In one case, the DOT said, passengers starting in New York could transfer in Los Angeles to an Air Tahiti Nui flight to Tahiti, French Polynesia. In a second instance, New York passengers could fly Qantas to L.A. and then switch to an American Airlines flight to Auckland, New Zealand.

Qantas maintains it did nothing wrong. It codeshares with American and Air Tahiti Nui, and in both cases, customers had bought Qantas flight numbers for all legs. Effectively, Qantas said, the passengers were flying Qantas for their entire itineraries.

But the DOT ruled the codeshares were different.

“By holding out flights and transporting revenue passengers between two points within the United States and then placing those passengers on flights operated by other carriers for onward transportation to foreign destinations, Qantas engaged in unauthorized cabotage,” it said in its decision.

Interestingly, the DOT sometimes grants carriers exemptions from cabotage laws, often for arcane reasons. Samoa Airways, based in Samoa, an independent country, is temporarily permitted to carry passengers between Pago Pago and the Manu’a Islands, both in American Samoa, a nearby U.S. territory. No U.S.-flagged airlines wish to fly the route.

A U.S. law firm has repeatedly sought and received exemptions for the airline in recent years, arguing it “…prevent[s] severe hardship to American Samoa residents, who would otherwise be required to travel between the islands by boat.”

As for Qantas, it expects to continue flying between New York and L.A for the foreseeable future. However, in September, it will switch from the 747 to the smaller and more efficient Boeing 787-9.

Within about five years, Qantas is hopeful it will finally be able to fly nonstop from Sydney to New York, making the Los Angeles stop unnecessary. But to do that, Boeing or Airbus will need to build Qantas a plane capable of flying at least 18 hours.