Japan is closer than you think.

Flight May Get Cheaper Between US and Japan With New ‘Open-Skies’ Deal

Submitted By: Jonathan Green 13 December 2009 472 views One Comment

Japan and the United States have reached an “open skies” deal removing restrictions on flights, opening the way to lower fares across the Pacific and to shake up alliances among airlines.

The agreement, reached late Friday after five rounds of talks culminating in a full week of closed-door negotiations in Washington, could give new urgency to bids by US carriers for a slice of ailing giant Japan Airlines.

Japanese and US negotiators agreed to scrap a half-century accord that preset the number of flights, instead allowing carriers in the world’s two largest economies to adapt schedules to demand.

In one key point of contention, the United States said Japan agreed to give US carriers greater access to Tokyo’s Narita and Haneda airports, gateways into Japan and lucrative Asian markets.

US Transportation Secretary Ray LaHood said the open skies deal “has been a longstanding 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,” he said in a statement.

In Tokyo, Transport Minister Seiji Maehara also praised the deal.

“The Japan-US route is the biggest aviation market for Japan. It is extremely meaningful to reach the accord,” he said.

But the two sides did not announce a date for the agreement to go into effect, with LaHood saying that the two countries had to finalize procedures.

Japan’s two carriers — Japan Airlines and All Nippon Airways — have both been seeking exemption from US antitrust laws, which is now possible with the open skies deal but needs review from another part of the US government.

Japan Airlines (JAL), which has been cutting thousands of jobs to stay afloat despite three government bailouts since 2001, held out high hopes from the open skies deal.

“Our company hopes to build a strong network by applying for antitrust immunity after determining a US airline company as our partner,” JAL president Haruka Nishimatsu said.

The open skies agreement would make it easier for Japanese and US carriers to forge new code-sharing alliances.

US carriers had been racing to seal deals with Japan Airlines before the open skies deal comes into effect, but JAL has been calmly examining the bids.

Japan Airlines’ current partners led by American Airlines last week offered it a 1.1 billion-dollar lifeline, hoping to counter a bid by rival Delta Air Lines which is hoping the Japanese carrier switches allegiances.

American Airlines accused Delta of trying to derail the open skies talks, believing it would lose out.

“This open skies agreement will effectively reset the playing field and enable new working relationships,” said Will Ris, American’s senior vice president for government affairs.

But Delta said it supported the deal and hoped it would “enable Delta and Japan Airlines to engage in deeper and more effective cooperation, producing greater benefits for the carriers and their customers.”

It will be the 95th open skies deal for the United States and replace a bilateral agreement with Japan dating to 1952, in the wake of World War II.

Under the existing agreement, Japanese carriers run 136 passenger flights each week between the countries — 94 by Japan Airlines and 42 by rival All Nippon Airways — while US carriers fly 296.

Japanese carriers argue that the number of flights is lopsided in favor of US airlines, but US carriers counter that it is evenly divided when looking at flights by alliances rather than individual carriers.

Japan Airlines is partnered with American Airlines in the Oneworld alliance, while the Star Alliance groups All Nippon Airways, Continental Airlines and United Airlines.

Delta and its subsidiary Northwest Airlines have no Japanese partner in their Sky Team alliance.

Source: AFP
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