The US Department of Transportation (DOT) imposed USD125,000 civil penalties on Qantas (QF, Sydney Kingsford Smith) for unauthorised transportation of passengers on its intra-US Los Angeles International-New York JFK flights in 2015 and 2016.

The penalty includes USD62,500 payable within a month and another USD62,500 suspended pending the carrier's compliance with the order.

While the Australian carrier is authorised to operate services out of Australia via Los Angeles to New York, it is not permitted to sell tickets only for the American sector of the route. Normally, passengers would transfer at Los Angeles from services out of Sydney Kingsford Smith, Melbourne Tullamarine, and Brisbane International, all operated by Qantas itself.

However, the DOT found that in 2015 and 2016 the Australian carrier also sold tickets for flights out of New York JFK via Los Angeles to each of Papeete and Auckland International, with the transpacific legs operated under code-share agreements by Air Tahiti Nui and American Airlines respectively. By doing so, the DOT has argued, the carrier had been effectively operating intra-US sector separately from its services out of Australia.

"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 in violation of 49 U.S.C. § 41703, violated the terms, conditions, and restrictions of its foreign air carrier permit in violation of 49 U.S.C. § 41301, and engaged in an unfair and deceptive practice in violation of 49 U.S.C. § 41712," the DOT has argued.

Qantas has unsuccessfully tried to argue that code-share flights fulfil the same criteria as its own services out of the US since the passengers only transferred at Los Angeles and did not leave the airport. It was also impossible for any customer to buy a ticket via Qantas solely for the intra-US sector and the entire route was operated under the Australian carrier's QF code.

The DOT has also forbidden Qantas to sell itineraries via Los Angeles connecting the carrier's own intra-US services and code-share operations to further destinations.