Australian carrier Qantas has agreed to pay a $125,000 fine
to the Department of Transportation (DOT) to settle a charge that it violated
a U.S. rule prohibiting foreign airlines from carrying domestic traffic.
Qantas admitted no wrongdoing in the March 28 consent order,
but said it would pay the fine to quickly resolve the matter.
Under U.S. law, foreign airlines can only fly passengers
between two domestic locations, a practice known as cabotage, if they then
carry those passengers onward to a final destination outside the U.S.
The DOT said Qantas violated the rule in 2015 and 2016 when
it marketed and sold itineraries from New York to Los Angeles, and then onward
to Auckland and Papeete, Tahiti. Qantas flew the New York-Los Angeles segment,
but relied on codeshare partners American and Air Tahiti Nui to move passengers
onward to Auckland and Papeete, respectively.
"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," DOT
assistant general counsel Blane Workie wrote in the consent order.
Qantas, while acknowledging that it sold those itineraries,
said it disagrees with the DOT's interpretation of U.S. regulations, which
relies on a 1959 U.S Civil Aeronautics Board decision.
"This decision was made nearly 30 years before
codeshares were used in aviation," a Qantas spokesperson wrote in an
email. "Qantas believes that passengers travelling on a Qantas codeshare
flight are Qantas customers, irrespective of the fact that they are travelling
on an aircraft operated by a partner, and hence these itineraries do not
The spokesperson also noted that Qantas quickly stopped
selling New York-Auckland and New York-Papeete itineraries when the DOT raised
Qantas must pay half the $125,000 fine within 30 days and
the other half within a year.