Japan, U.S. strike `open skies` deal to free up aviation markets+

WASHINGTON, Dec. 12 Kyodo -
Japan and the United States agreed Friday to fully liberalize their civil
aviation markets under a landmark ''open skies'' arrangement that sets the
stage for stronger transpacific airline alliances, officials from the two
countries said.
This marks the first full aviation liberalization pact for Japan that covers
both of Japan's two major airports -- Narita and Haneda -- that serve Tokyo.
The move is certain to add fuel to the fierce competition between U.S. air
carriers Delta Air Lines Inc. and American Airlines Inc. as they try to woo
cash-strapped Japan Airlines Corp. into their respective folds.
''It is extremely meaningful that we reached an agreement between Japan and the
United States, which is the biggest aviation market for our country,'' said
Japanese Land, Infrastructure, Transport and Tourism Minister Seiji Maehara in
a statement.
A Japan-U.S. open skies pact will give air carriers more freedom in opening
routes and selecting the number of passenger and cargo flights between them. It
could also lower antitrust hurdles for major airlines in Japan and the United
States when they jointly determine prices and sell tickets.
Friday's agreement was reached after negotiators from both sides extended the
originally scheduled four days of intensive talks in Washington an extra day to
sort out differences on the allocation of slots at Narita and Haneda airports.
In announcing the accord, U.S. Transportation Secretary Ray LaHood said that
forging an open skies agreement with Japan has been a long-standing U.S. 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,'' he said in a statement.
At the latest round, the negotiators agreed that U.S. and Japanese air carriers
will each be granted landing and departure slots for up to four round trips
daily late at night and early in the morning between U.S. cities and Haneda
airport in Tokyo, which is due to open a new runway next October.
Following the opening of the new runway, slots for 40 round-trip international
flights will be added to the airport. Of the 20 to be opened to foreign
airlines, 14 had earlier been allotted to nine countries and Hong Kong.
As for Japan's primary goal of reducing the share U.S. carriers hold over the
slots at Narita in Chiba Prefecture, they came to a compromise that the number
of the current U.S. slots there will remain unchanged.
This means U.S. airlines' share at the airport will drop to around 25 percent
from the current 28 percent once the planned expansion in slots for an
additional 27 or so round trips next March is implemented.
Japanese officials said Tokyo and Washington have seen eye to eye on the view
that the share should decline to 20 percent in the future, without putting any
time frame on it.
At major overseas airports, domestic airlines usually command the share of
about half the total slots. But at Narita, Japanese carriers' slots make up
less than 40 percent.
Japan expects an open skies undertaking with the United States to take effect
after being signed by the two countries' ministers by next October. It is
hopeful that the pact will contribute to increasing the international presence
of Japanese airports.
Through the arrangement, Tokyo is also eager to help JAL and its Japanese
competitor All Nippon Airways Co. strengthen partnerships with U.S. carriers
and make their operations more efficient.
The United States wants to cultivate lucrative Asian routes jointly with JAL
and ANA. The pact is thus sure to intensify the battle between Delta and
American Airlines for a tie-up with JAL.
JAL President Haruka Nishimatsu said in a statement that Japan's biggest
airline ''will aim for providing better services for customers through managing
air routes efficiently and establishing a strong network.''
Delta has offered JAL a $1.02 billion financial package with global SkyTeam
alliance members, including a $500 million investment, to wrest the Japanese
airline from the rival ''oneworld'' alliance with American Airlines, a unit of
AMR Corp.
American Airlines has also said it is prepared to invest up to $1.1 billion in
JAL, together with its oneworld partners and private equity firm TPG Inc. to
prevent JAL's defection.
ANA and United Airlines, which belong to the Star Alliance group, are also
likely to strengthen their partnership, particularly for transpacific services.
The latest was the fifth round of negotiations between Japan and the United
States since the talks began in October last year. Both sides agreed at the
round in October this year to pursue the completion of the negotiations by the
end of the year.
The Japanese delegation was led by Keiji Takiguchi, deputy director general of
the Land, Infrastructure, Transport and Tourism Ministry's Civil Aviation
Bureau. The U.S. team was headed by John Byerly, deputy assistant secretary of
state for transportation affairs.
==Kyodo