Thursday, October 8, 2009

U.S. Airline Access to the Japanese Market

While it has been widely reported in most major news outlets that only Northwest Airlines and United Airlines have direct traffic rights to Japan, it appears this information is incorrect.  See Agreement Between the United States and Japan Relating to and Amending the Agreement of August 11, 1952, As Amended, T.I.A.S. 12945 (Apr. 20, 1998) (available here).  While it is true that under the original 1952 treaty, only United and Northwest were designated to offer international service between the U.S. and Japan, according the 1998 executive agreement between the two parties:

1. Designations

(a) Each party may designated, pursuant to the 1952 Agreement, up to four (4) airlines, including any airlines, other than incumbent combination airlines, designated under the 1952 Agreement and all agreements and understandings related thereto . . . , to operate combination services as non-incumbent combination airlines[.]

(b) Effective January 1, 2000, each Party may designate a fifth non-incumbent combination airline.

Id. pt. I(B)(1)(a)-(b).

According to a footnote 5 of the agreement, the U.S. opted to designate Continental, Delta, and American Airlines. 

Though this does make the oneworld Alliance's retention of Japanese Airlines less dire than has been discussed, it's important to note that the two other major alliances, Star and SkyTeam, each have two U.S. carriers with access to Japan.  Additionally, the Star Alliance benefits from having Japan's other major international carrier, All Nippon Airways, as part of its alliance.  Needless to say, despite American's access to the Japanese market, if JAL eventually defects to SkyTeam, it would leave oneworld at a competitive disadvantage in the transpacific market.

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