oneworld (American Airlines) vs Skyteam (Delta Air Lines) in the battle for Japan Airlines

Japan Airlines' partners in the oneworld alliance issued (03-Dec-2009) a declaration to JAL, the Japanese Governement and the Japanese public stating that "oneworld is by far the best alliance for JAL". oneworld have put together a "total alliance value proposition" for JAL totaling approximately USD1.8 billion of investment and additional revenue. Key elements include proposals to:

• Restructuring efforts: oneworld would invest in the restructuring of JAL, through a link with the TPG Investment Group, which has indicated it, with American Airlines, would be willing to provide funding of up to USD1.1 billion;
• American Airlines JV: oneworld would attempt to develop an anti-trust immunised (ATI) JV agreement across the Pacific with American, with an application for ATI to be filed immediately after an open skies agreement is reached between Japan and the US. This would result in increased cooperation between American and JAL, leading to approximately USD100 million in revenue p/a (according to oneworld), on top of the USD500 p/a gained through existing oneworld partnerships. Oneworld added that it believes "regulators in the US are likely to give an American-JAL partnership speedy ATI approval, as it would foster balanced competition among airline alliances across the Pacific, maintaining the share of Japan-US passenger traffic among the three global alliances at around one-third each". oneworld warned that if JAL were to join SkyTeam, it would "raise intractable competition issues and face severe regulatory opposition in the US because of the stranglehold this combination would hold on Japan-US travel".
• European cooperation: JAL would be able to expand cooperation with British Airways and Finnair. The European airlines are proposing "far more extensive cooperation" with JAL, including increased codeshare operations;
• LCC development support: Qantas would offer expertise in developing its value-based airline and two-brand strategy to JAL. oneworld commented, "Qantas has offered JAL full access to this expertise should it be interested in drawing upon it, enabling it maximise its ability compete in a sector of growing importance in today's airline industry environment".
• Latin America cooperation: JAL would be able to develop its presence in the Latin America market through expanded relationships with oneworld partners LAN and Mexicana;
• Other codesharing opportunities: The plan calls for increased codesharing with other oneworld members: Iberia has proposed to JAL an expansion in the number of destinations covered by their codeshare agreement, while talks with a similar aim are currently underway between Cathay Pacific and JAL;
• Airport co-location: oneworld plans to identify opportunities for increased airport co-location for JAL alongside oneworld partners at more key airports worldwide. [more]

oneworld alliance: "The oneworld alliance already has a significant investment in the success of Japan Airlines, and we are prepared to do even more to ensure that American, oneworld and JAL have a successful partnership for the long-term. We believe this in turn will allow JAL to produce significant benefits for all of its stakeholders - the travelling public, employees and investors, and certainly the Japanese tourism and aviation industries. The total alliance proposition developed by American Airlines, as JAL's biggest partner, our fellow members of oneworld and our financial partners TPG is very clearly vastly superior in every aspect to anything anyone else is offering. When you add up the facts, the most value and best long-term solution for JAL comes from remaining with oneworld so that it can continue to focus with partners on building a stronger foundation for the future," Gerard Arpey, Governing Board Chairman and American Airlines' Chairman and CEO. Source: Company Statement, 04-Dec-2009.

oneworld alliance:"Japan Airlines is a highly valued member of oneworld - and oneworld and its member airlines are determined to build on our long-standing, successful and mutually beneficial working relationships with JAL. A change in alliances, at the best of times, carries a great deal of risk. Doing so at a time when the industry is experiencing such turbulence adds even more danger. oneworld's proposals are based on years of experience of working with Japan Airlines. So apart from the overall vastly superior offer we are collectively making, we also deliver certainty and stability," John McCulloch, Managing Partner. Source: Company Statement, 04-Dec-2009.

Delta Air Lines confirmed it, in conjunction with its other SkyTeam members, are ready to offer JAL a financial aid package of approximately USD1 billion, including a USD500 million equity investment (Reuters/Japan Today/Wall Street Journal/Associated Press/Bloomberg, 03-Dec-2009). Delta added it is also considering teaming up with a third party investor, such as a private equity fund or venture capital firm, to support the carrier. Delta President, Edward Bastian, added that Delta and its SkyTeam partners would be happy to offer more than the previously announced USD1 billion of financial support, if required.

Delta Air Lines: "We are putting our capital at risk, not someone else's capital... I think that's important. However, if the (Japanese) government asks us to go back and raise more capital, we are happy to do so," Edward Bastian, President. Source: Reuters, 03-Dec-2009.

JAL President, Haruka Nishimatsu, has stated he would make a decision regarding the offers by the end of the year.