14-Dec-2009 8:26 AM

USA-Japan reach open skies aviation agreement; United and JAL to seek immunity shortly

US Secretary of Transportation Ray LaHood announced (12-Dec-2009) the US and Japan reached agreement on the text of an open skies aviation agreement, liberalising US-Japan air services for the carriers of both countries. Once the agreement is finalised, Japan will become the 95th US open skies partner. It is the first agreement of its kind for Japan. Both the US and Japan "must affirmatively act in order to put the agreement into effect", according to Secretary LaHood. Under the new agreement (once finalised):

  • Access/designation: Airlines from both countries will be permitted to select routes and destinations based on consumer demand for both passenger and cargo services, without limitations on the number of US or Japanese carriers that can operate between the two countries or frequency of service;
  • Capacity/cooperation: Agreement removes restrictions on capacity and pricing, and provides "unlimited opportunities" for cooperative marketing arrangements, including codesharing, between US and Japanese carriers.
  • Tokyo-area airports: Agreement provides "opportunities for growth" of US carrier operations at Tokyo Narita International Airport and ensures "fair competition regarding the new opportunities" at Tokyo Haneda Airport." [more - US Secretary of Transportation] The agreement reportedly lowers the share of slots currently held by US carriers at Tokyo Narita from 28% to around 25% after the airport expands its slots in Mar-2010 (AFP/Kyodo News/Japan Times, 13-Dec-2009). Once Tokyo Haneda opens its new runway in Oct-2010, Japan will also reportedly separately grant US and Japanese air carriers the rights to operate up to four return daily services between Haneda and the US during the midnight to early morning hours;
  • Timeframe: US-Japan will officially sign the agreement, which is required before the US approves antitrust immunity applications, by Oct-2010, when Tokyo Haneda Airport opens its new runway (Japan Times, 13-Dec-2009);
  • Airline responses: Japan Airlines, Delta Air Lines, Continental Airlines/Continental Micronesia, American Airlines, United Airlines applauded (12-Dec-2009) the open skies agreement. United Parcel Service, Hawaiian Holdings and Atlas Air Worldwide Holdings are also among carriers that will be affected from the agreement.[more - Continental Airlines/Continental Micronesia] [more - American Airlines] [more - United Airlines] [more - Japan Airlines][more - Delta Air Lines]
  • Global Alliances: United Airlines stated it expects to file an application with the Department of Transportation for anti-trust immunity across the Pacific with Continental and ANA "shortly", with ANA adding that it would “quickly” make preparations for a strategic tie-up with its US partners (Bloomberg, 13-Dec-2009). Similarly, Japan Airlines (JAL) stated it intends to apply for anti-trust immunity with a strategic US partner "as soon as possible, so as to seize this opportunity to strengthen our network and bring added benefits to our valued customers". [more - Perspective]

Delta Air Lines: "This agreement opens the door to antitrust immunity, which would enable Delta and Japan Air Lines to engage in deeper and more effective cooperation, producing greater benefits for the carriers and their customers. Delta is confident that the Department of Transportation would grant it antitrust immunity with JAL, and Delta will continue to support open skies agreements between the United States and its trading partners," Company Statement, 12-Dec-2009.

United Airlines: "We congratulate the US and Japanese delegates for reaching this historic agreement as we have long advocated for Open Skies with Japan because it will benefit our customers, our employees and our investors as we strengthen our Pacific network. We have the right partners and look forward to forming a joint venture across the Pacific with our longtime partner All Nippon Airways and Continental, which joined the Star Alliance in October, providing our customers with access to more destinations and convenient schedules," Glenn Tilton, President, Chairman and CEO. Source: Company Statement, 12-Dec-2009.

ANA: ‘‘We will take strategies that will improve the convenience of the users of our services such as increasing flights to American cities and selecting a US partner as early as possible,” Shinichiro Ito, President. Source: Kyodo News, 13-Dec-2009.

American Airlines: "By their nature, bilateral agreements create a system in which some airlines receive aviation rights while others do not. Open Skies agreements, on the other hand, end discriminatory aviation policies and are in the best interest of American and Japanese people as well as the nations' airlines. This Open Skies agreement will effectively reset the playing field and enable new working relationships, particularly pro-competitive joint ventures granted anti-trust immunity by the US and Japanese governments. Ultimately, the agreement will benefit not only the traveling public, but both countries in terms of tourism, trade and commerce - and traffic between the two nations can grow unimpeded," Will Ris, Senior VP Government Affairs. Source: Company Statement, 12-Dec-2009.

American Airlines: "The existing bilateral agreement had provided a competitive advantage on routes to, from and through Japan for certain carriers for many years. American joins the other U.S. air carriers in the market to applaud government negotiators for effectively reaching an agreement to best serve the interests of the traveling public despite the last minute efforts by the dominant carrier in the market, Delta/Northwest Airlines, to derail the talks," Company Statement, 12-Dec-2009.

US Government: “Achieving Open Skies with Japan, a major U.S. transportation and trade partner, has been a long-standing US goal and is good news for air travelers and businesses on both sides of the Pacific. Once this agreement takes effect, American and Japanese consumers, airlines and economies will enjoy the benefits of competitive pricing and more convenient service,” Ray LaHood, US Secretary of Transportation. Source: Company Statement, 12-Dec-2009.

Japan Government: "It is extremely meaningful that we reached an agreement between Japan and the United States, which is the biggest aviation market for our country," Seiji Maehara, Transport Minister. Source: Japan Times, 13-Dec-2009.

Want More News Like This?

CAPA Membership provides access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find Out More