Monday, October 5, 2009

JAL Suspends Talks with U.S. Carriers

A new story out this morning is reporting that Japanese Airlines is putting its negotiations with American Airlines and Delta on hold while a Japanese Government-appointed task force reviews the financial status of the airline.  See Doug Cameron, JAL Task Force Puts Alliance Review On Hold, Dow Jones Newswire, Oct. 5, 2009 (available here).

For the moment, this has to be seen as good news for American Airlines.  Unlike Delta, which acquired additional traffic rights into Japan when it merged last year with Northwest, American has limited access to the Japanese air transport market.  (See correction to news reports to the contrary here.)  To bolster its access, American relies on a codeshare arrangement with JAL as part of the Japanese airline's membership in the oneworld Alliance.  For the past several weeks, analysts had speculated that Delta was looking to entice JAL to switch over to its alliance, SkyTeam, as part of an equity injection deal.  At the same time, American had reportedly been offering its own equity investment and may have called upon some of its oneworld partners to join-in on the arrangement. 

From the standpoint of aviation law and policy, hopes were high that any involvement from a U.S. airline in JAL would lead to Japan finally solidifying an open skies agreement with the U.S.  Along with Brazil, China, and Russia, Japan is one of the major markets which does not have a liberal bilateral arrangement with the U.S.  Under the terms of its current agreement, only Northwest and United Airlines have direct market access.  United also benefits from its own codeshare agreement with Japan's other major airline, All Nippon Airways, as part of the Star Alliance.  Due to unofficial U.S. international aviation policy restrictions which conditions antitrust immunity on the existence of an open skies treaty, neither Japanese airline enjoys the full level of integration Star and SkyTeam's transatlantic partners do.

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