Japan, US sign open skies deal

October 25, 2010

, TOKYO, Oct 25 – Japan and the United States signed an "open skies" deal Monday to further liberalise commercial aviation and allow more airline alliance cooperation on flights between North America and Asia.

Tokyo and Washington agreed the framework in December 2009 in an effort to allow carriers from the two countries to work together more closely in setting fares, routes and schedules and cutting costs.

At a ceremony in Tokyo Monday, Japanese Transport Minister Sumio Mabuchi and US ambassador to Japan John Roos signed the memorandum of understanding paving the way for airlines to implement the deal.

"As of today\’s signing, Japanese and US aviation industries are fully liberalised," said a Japanese transport ministry statement.

The deal allows carriers to work "more closely in setting fares, arrange flight schedules and routes and coordinate on cost savings through increasing code share flights and other operational methods," said Geoffrey Tudor, a Tokyo-based analyst at Japan Aviation Management Research.

While the carriers have already begun some code-sharing operations, Japan Airlines and All Nippon Airways will also gain immunity from US anti-trust laws to allow closer collaboration with their partners.

As international airline regulations can generally impede cross border takeovers or majority shareholdings by foreign investors, anti-trust immunity is one way around such barriers, said Tudor.

Japan Airlines, which is in the midst of a state-led restructuring after declaring bankruptcy earlier this year, is part of the Oneworld alliance with American Airlines.

American persuaded JAL to remain part of the alliance earlier this year after a push by Delta Air Lines to lure it into its rival SkyTeam grouping.

All Nippon Airways is a member of the Star Alliance with newly merged United Airlines and Continental Airlines.

"Two big groupings — the ANA-United team and the JAL-AA team — create a more competitive environment," said Tudor, adding that the bigger networks will enable "cheaper fares and more frequent flights on key routes."

The accord will also enable cost cuts and more flexibility in a tough business environment, said Takahiko Kishi, an aviation analyst with Mizuho Investors Securities.

In August JAL announced details of a rehabilitation plan that will see thousands of job cuts as well as route closures and a debt waiver.

In a related move, the Japanese government is aiming to widen similar pacts with Asian countries, which would allow new airlines and budget carriers to enter Tokyo\’s Narita and Haneda airports, the Nikkei daily said Monday.

Japan is aiming to widen deals with nine Asian nations and regions, including South Korea, Thailand, Malaysia and Singapore as it looks to expand the number of landing slots at the Tokyo airports, the Nikkei said.

It also aims to sign similar deals with China, Taiwan, Indonesia, the Philippines and others in the near future, it said.

Haneda airport opened a new runway and passenger terminal last week to make it the city\’s second international hub alongside Narita airport, located outside the city centre, and boost the capital\’s stature as an Asian gateway.


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