Flying LA to The Shire just got a little easier

AA and Qantas show off new plane, new route

Qantas and American Airlines have tightened their relationship, with the Australian carrier pushing deeper into the U.S., while its U.S. counterpart taps New Zealand.

"This allows us to have routes that we wouldn't have been able to operate on our own," Qantas CEO Alan Joyce told CNBC Friday. "We're a lot stronger together than we would be separate."

The two carriers, both part of the One World code-sharing alliance, have boosted their revenue-sharing tie-up, announcing that Read MoreAmerican Airlines would add services to New Zealand's Auckland Airport from Los Angeles. The deal will allow travelers to connect with Qantas' domestic offerings in New Zealand via the Jetstar brand as well as travel onward to Australia.

At the same time, American Airlines will begin offering a Los Angeles-to-Sydney service, resulting in a net 9 percent increase in capacity on the popular route. That will allow Qantas to free up planes to launch a Sydney-to-San Francisco flights, a service it hasn't offered since 2011.

The deal differs from a traditional code-share as the two carriers are sharing revenue and coordinating schedules.

Open skies in Australia: Will it draw carriers?

Qantas has expanded its U.S.-focused service, as it faces a relatively stagnant and highly competitive domestic market. Last year, about 60 million passengers flew on Australia's domestic commercial flights, nearly unchanged from 2013, and load factors fell slightly. Load factor is a measure of an airline's passenger-carrying capacity, often used as an efficiency measure.

The Australian carrier last year launched non-stop services between Sydney and Dallas, a flight of about 16 hours, using the Airbus A380.

"We have an amazing success on our Sydney-Dallas route which connects to American's massive hub in Dallas to 150 different destinations," Joyce said. "Our L.A. service, a lot of traffic is going on to the 50 destinations that American serves out of L.A."

In addition to weighing a Melbourne, Australia to Dallas route, Qantas is also considering adding Sydney-to-Chicago services as well, Joyce said.

American Airlines, meanwhile, gets the opportunity to target growing traffic between the U.S. and New Zealand. Currently, Air New Zealand, part of the One World-rival Star Alliance, is the sole carrier flying between that country and the U.S., although its code-share partner United Airlines is expected to add services soon.

A Boeing Co. B777-300ER aircraft operated by American Airlines inside the Qantas Airways hangar at Sydney Airport in Australia, on Friday, Nov. 13, 2015.
Brendon Thorne | Bloomberg | Getty Images

"New Zealand is a growing market and it has no One World service on it," Doug Parker, chairman and CEO of American Airlines, told CNBC. He expects American Airlines will be able to connect travelers "more efficiently" with destinations in the U.S.

More tourists from the U.S. have been schlepping to New Zealand, driven in part by the popularity of the Lord of the Rings and Hobbit films, which were filmed there. Total visitor arrivals to the country rose up around 8.5 percent in the 12 months ended in September, while the number of travelers from the U.S. rose around 11 percent over the same period, according to New Zealand government data.

Shire tweet

Parker noted that American Airlines had been pushing deeper into Asian routes, adding services to Hong Kong, Shanghai and Beijing from Dallas.

"It's an important strategic growth route market for us and we continue to expand our Los Angeles hub as well," Parker said.

One big driver of the fresh routes is Boeing's new 787 Dreamliner, a wide-body aircraft that's about 20 percent more fuel-efficient than its peers, with a range of as much as 9,000 miles.

"It's got amazing range, which introduces route opportunities for us that we've never been able to consider before," Joyce said.

Indeed, American Airlines is planning to use the 787 to fly its new route to Auckland.

—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1