Qantas has agreed to pay a fine of $US62,500 within 1 month, and agreed to pay another $US62,500 if it violates a Department of Transport (DoT) agreement within in 1 year. DoT says Qantas was in violation of cabotage rules.
Under the rules foreign airlines are not allowed to carry passengers between US cities.
Qantas has been carrying passengers between New York and LA and allowing passengers to transfer to other Qantas flights to Sydney, Melbourne and Brisbane for years. However, in 2015 and 2016 Qantas sold flights and allowed passengers to fly between New York and LA, disembark in LA and transfer to a Air Tahiti Nui flight to Tahiti. It also allowed passengers to do the same on an American Airlines flight to Auckland New Zealand.
It was the Air Tahiti Nui and American Airlines transfers that DoT ruled breeched the cabotage rules. Those 2 flights are code shares. Qantas maintains that because they are codeshares with QF flight numbers and itineries, that Qantas is in effect carrying them for the entire journey.
— Jamie Freed (@Jamie_Freed) April 1, 2018
The forerunner of the DoT, the Civil Aeronautics Board made the decision in 1959 that a foreign airline is only allowed to transport within the US “only that traffic which it brings in or carries out.” It was this that DoT based it’s decision on.
In a statement Qantas told media, “We’re disappointed by the Department of Transportation’s ruling, which we believe mischaracterizes Qantas’ codeshare arrangements with other carriers operating to and from the U.S., as well as the cabotage rules between the two countries.”
In it’s decision DoT said, “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.”