Japan Airlines (JAL) today announced its highly anticipated alliances decision. It has turned away from Delta and SkyTeam to strengthen its existing partnership with American Airlines. The carriers, both members of the oneworld alliance, will jointly apply to the US Department of Transportation (DOT) and the Ministry of Land Infrastructure, Transport and Tourism of Japan (MLIT) for antitrust immunity (ATI) approval on transpacific routes.
A pivotal move in JAL's rehabilitation plan, JAL and AA, subject to government approval, intend to enter a joint business venture aimed at "enhancing their scope of cooperation on the routes between the US and Japan, through adjustments to their respective networks, flight schedules, and other business activities, allowing both carriers to better complement each other to develop and offer competitive products and quality service to their customers".
JAL Group Chief Operating Officer and President, Masaru Onishi stated, "we have analysed this issue in great detail, and we are excited at the prospects in terms of the convenience and benefits for our customers. We also firmly believe that the advantages of this development with American Airlines can strongly support JAL at a time when we are striving towards the revival of our business, which we are determined to achieve. We certainly look forward to a deeper, more mutually-beneficial relationship with our long-time partner.”
The airline added, "as JAL undergoes the process of reorganisation, it will seize the opportunity presented by this partnership to strengthen its network and further improve its offerings. From hence forth, in addition to the joint business agreement with AA, JAL will also fortify its relationships with other partners in the oneworld alliance, so as to provide customers a comprehensive range of products and services, and become once again, the airline of customer’s choice".
American's Chairman and CEO, Gerard Arpey, stated, "we respect that this was an important decision for Japan Airlines and the government of Japan, and we believe they have made the right choice for JAL's many stakeholders, for Japan's national interests and for consumers traveling between Japan and the US. When oneworld executives and I recently met with JAL Chairman Dr Kazuo Inamori and President Masaru Onishi and their team, we reiterated our commitment to support JAL on its path to success. We stand firmly by that commitment, and look forward to working closely with JAL to support its restructuring efforts."
The outcome is a massive win for Gerard Arpey and his team at American Airlines and friends at oneworld, which stood to lose a key element of its North Asian operation. Antitrust immunity is likely to be achieved, with the JAL-AA and ANA-United applications likely to proceed together under the same US Department of Transportation docket. It also opens the door for a joint business agreement between JAL and British Airways and the prospect of greater codesharing on European routes. Qantas also retains a key alliance partner in JAL and it paves the way for the injection of Jetstar into the Japanese market at a later date.
American stood to lose more than Delta, which already has a significant presence at Narita Airport with former Northwest metal serving a range of transpacific and Asian routes over its Tokyo hub. Delta, in the absence of the JAL linkage, is expected to focus attention on developing its presence in Tokyo organically, while it will also strengthen alliance partnerships in other Asian markets with SkyTeam members Korean Air and China Southern Airlines.
Delta issued a brief statement, noting, "Delta is well positioned as the No 1 carrier between the US and Asia. Customers can continue to count on Delta for unmatched access to Japan, with nonstop service between ten US destinations and Tokyo. With recently announced plans to invest USD1 billion in our product, Delta remains committed to providing a leading option for travel across the Pacific. Delta's competitive Pacific presence, along with our trans-Atlantic joint venture with Air France/KLM and leading position in global markets, will continue to allow Delta and our SkyTeam partners to meet demand worldwide."
Outlook: Uncomfortable times ahead for JAL
The status quo with regard to JAL's alliances arrangement is the more comfortable option for JAL. But it will be the only comfort JAL can look forward to over the next three years of drastic and painful restructuring.
The maintenance of the status quo meanwhile raises questions about the future of JAL's slots at Narita when the Japanese carrier inevitably cuts back its network.