Delta Air Lines and Virgin Blue’s plan to work together on flights between the United States and Australia suffered a setback Wednesday when the U.S. Transportation Department rejected their request.

United Airlines and Qantas dominate the U.S.-Australia market, with Delta currently only offering a Sydney-Los Angeles route on their schedule.

According to an Associated Press report, “Delta and Australian budget airline Virgin Blue wanted
permission to coordinate fares and schedules, and to share money from
the flights. Usually, antitrust laws would block that kind of
collaboration, but airlines can get permission in some cases for joint
ventures if they can show that consumers will benefit. Australian
authorities approved the proposal in December.”

But without providing proof to the Transportation Department that the alliance would offer travelers lower airfare and more capacity, the DOT does not feel the two airlines should work together.

The DOT stated Wednesday that the two “have virtually no experience as commercial partners and employ
business processes that they admit are not compatible. They have only just begun to explore the feasibility of
arms-length cooperation, much less the degree of cooperation that
requires, or would merit, a grant of antitrust immunity.”

Both companies have two weeks to object. Delta released a statement that read, “We
strongly believe our proposed alliance with the Virgin Blue Group will
be good for consumers. We are
reviewing the DOT’s tentative order and will respond within the comment
period.”