UPDATE: Japan Airlines' Gambit Puts Regulators In The Spotlight
10 February 2010 - 7:26AM
Dow Jones News
Global aviation regulators face a hectic schedule to translate
into reality the expectations created by Japan Airlines Corp.'s
(JALSY, 9205.TO) decision to retain American Airlines as its
partner.
A series of key decisions are being jammed into the next nine
months that will determine the future shape of the airline
industry, a timetable that some observers view as unrealistic.
The process is also expected to re-ignite fierce industry
rivalries after a period of detente created by intensifying
scrutiny by competition authorities of the three global
alliances--SkyTeam, Star and oneworld--that dominate the global
airline business.
The scrap for JAL between American, a unit of AMR Corp. (AMR),
and Delta Air Lines Inc. (DAL) saw some of the most colorful
exchanges between executives seen for some years.
The gloves will come off again Feb. 16, when at least four U.S.
airlines compete for limited new access to Tokyo's Haneda airport
in one of the most hotly contested route awards seen in recent
years.
The tussle for access to Haneda is expected to set the tone for
industry rivalry. U.S. carriers won the right to start just four
daily services to Haneda, compared with 20 for Japanese
airlines.
The airport is highly prized because of its proximity to Tokyo's
business district. At 30 minutes, the journey is a third of the
time taken to reach Tokyo's main gateway at Narita airport.
Delta still has the largest transpacific network despite lacking
a Japanese partner. But its focus at Narita means it has the most
to lose if premium travelers divert to Haneda. "Delta is interested
in service at Haneda Airport, and we are currently considering our
options," said a spokesman.
American, United and Continental Airlines Inc. (CAL), which have
Japanese partners, said they are "evaluating options," but are also
expected to seek Haneda access.
U.S. Transportation Department Nears Oneworld Ruling
The U.S. Department of Transportation is also expected to reveal
its decision this week on the application for antitrust immunity
lodged by American, British Airways PLC (BAIRY, BAY.LN) and their
oneworld partners.
People familiar with the situation expect the Transportation
Department, after an exhaustive 18-month review, to approve a pact
that brings oneworld into line with immunity already granted to
members of Star and Delta's SkyTeam, albeit with some
conditions.
The DOT routinely doesn't comment on pending cases. BA and
American have said they are confident of securing approval, despite
opposition led by Virgin Atlantic Airways.
While European regulators continue to examine transatlantic
pacts, the attention in the U.S. and Japan will shift to reviewing
two applications to immunize airline deals between the two
countries.
JAL and American plan to lodge their application in the coming
days. Three Star members--United Airlines, a unit of UAL Corp.
(UAUA), Continental Airlines and All Nippon Airways Inc. (ALNPY,
9202.TO)--made their own application in late December.
Japanese regulators have pledged to review the proposals in just
four months, even though they have no track record in such cases.
That would allow the alliances to take advantage of the opening of
Haneda to international flights from October, and cement the
proposed open-skies pact with the U.S. outlined last December.
Japan has asked the U.S. to expedite its own scrutiny to keep
the open-skies deal on track, though the DOT typically takes far
longer and recently rapped its counterpart for assuming any deals
would be cleared.
The battle for JAL has already delayed a DOT decision on a
request for immunity made by Delta and Australia's Virgin Blue
Holdings Ltd. (VBA.AU) last July.
While the Australian authorities approved the deal--which is
viewed as far less controversial than one involving the larger
Japanese market--the partners will have to wait until at least
August to implement a deal, based on established DOT procedure.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com
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