US Open Skies Deal With Japan Faces Airport Hurdle
11 September 2009 - 12:22PM
Dow Jones News
The U.S. and Japan have a once-in-a-lifetime opportunity to
liberalize their tightly-regulated airline market, according to
proponents of a proposed "open-skies" deal.
Negotiators started three days of talks in Washington D.C.
Wednesday aimed at paving the way for a new pact by the end of the
year to replace a decades-old agreement that limits trans-Pacific
passenger and cargo services. The talks conclude Sept. 11.
U.S. Transportation Secretary Ray LaHood outlined the U.S.
commitment in a speech Thursday, but any agreement is being
challenged by a potential split between U.S. carriers serving
Japan.
Some fear that an accord could be heavily weighted in favor of
Japanese carriers after its negotiators recently reversed long-held
opposition to a more liberalized deal, according to people familiar
with the discussions.
Japan had previously resisted loosening the existing pact
governing a highly-prized international market driven by business
traffic.
However, Japanese negotiators surprised the U.S. earlier this
year by prompting further talks that would break the oligopoly on
services held by Delta Air Lines Inc. (DAL), the United Airlines
unit of UAL Corp. (UAUA), FedEx Corp. (FDX) and Japan's two largest
carriers, All Nippon Airways Co. (9202.TO) and Japan Airlines Co
((9205.TO).
"Things are very different now," says one U.S. airline executive
familiar with the discussions. "There is a very real prospect of an
open-skies deal this year."
Japan's turnaround reflects plans to open Tokyo's Haneda airport
to limited international traffic next year. A new runway would open
up an airport just 15 minutes from downtown Tokyo, compared with
the 90 minutes to Narita, the existing international hub.
Securing access to Haneda, the world's fourth largest airport by
passenger numbers, has assumed a similar pivotal role in the talks
with Japan as London's congested Heathrow airport held in the
protracted talks that led to an open-skies deal with the European
Union.
Japan also hopes a deal will pave the way for All Nippon to
secure antitrust immunity, or ATI, from U.S. regulators, in line
with that enjoyed by fellow members of the Star Alliance grouping
headed by United and Deutsche Lufthansa AG (LHA.XE).
JAL, a member of the rival Oneworld group headed by AMR Corp.
(AMR) and British Airways PLC (BAY.LN), may also be hopeful of
winning antitrust immunity from the U.S. at some point.
But Delta, the world's largest airline, lacks a Japanese partner
in its SkyTeam alliance, and has been lobbying hard against any new
deal that "gifts" antitrust immunity to ANA without guaranteeing
fair access to international carriers at Haneda, said a person
familiar with the situation.
United and Delta declined comment ahead of the talks.
Japan is currently proposing to split 40 daily flights to
overseas markets from Haneda evenly between Japanese and foreign
carriers, with U.S. airlines receiving just four.
Delta, which acquired a large hub operation at Narita airport
when it acquired Northwest Airlines, is seen by observers as having
the most to lose from Haneda's expansion unless it can secure
additional access.
"If they are going to have an open-skies deal, it must be true
open skies which includes the elimination of restrictions on
pricing and the freedom to transfer slots among airlines at Haneda
and Narita," said a person familiar with Delta's position.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com