Friday, October 30, 2009

No Japan/U.S. Open Skies?

U.S. and Japanese negotiators concluded their latest round of air transport talks without finalizing an open skies agreement.  See Mariko Sanchanta, Hurdles Remain for U.S.-Japan Open Skies Deal, Wall St. J., Oct. 30, 2009 (available here).  According to lead U.S. negotiator John Byerly, "We made enormous progress on an open skies memorandum of understanding" and he remains "cautiously optimistic that we can succeed."  Succeed at what?  While the media attention has been on an open skies arrangement, the nature of the negotiations bespeaks something else.  According to the story:

At stake are lucrative new routes between Japan and the rest of Asia, which is the fastest growing aviation market in the world, and expanded services between Japan and the U.S. . . . 

Haneda, which is the more convenient of the two airports to Tokyo's city center, will offer new international services only between 11 p.m. and 6 a.m., when Narita closes down to commercial air traffic. At the moment, Japan is offering the U.S. only four operations a day, or eight landing slots at Haneda, according to a Japanese government official involved in the negotiations. "[The U.S.] says this is too small and not commercially meaningful, that it is not fair and equal" compared with what the Japanese carriers will receive, said the official.

Mr. Byerly said negotiations over slots are continuing. "There are only a limited number of flights available at night," he said, adding, "we have to discuss how many slots [we receive]."

In one concession by the U.S., its airlines would see their proportion of Narita's slots shrink under the deal currently being discussed. The U.S. carriers' share at Narita Airport is currently roughly 30% of all landing slots, but it won't get new ones when Narita expands its capacity by 10% next year. The move follows concerns from Tokyo that U.S. carriers had too much dominance at Narita.

Slots are not typically part of the open skies template.  Cf. U.S. Dept. of State, Current Model Open Skies Agreement Text (Jan. 10, 2008) (available here).  If the story is accurate, the slot negotiations appear more akin to the managed trade approach of old-style restrictive bilaterals than the liberalizing open skies ethos.  Open gateways and unlimited designation opportunities won't mean much to U.S. carriers if the Japanese Government is still allowed to protect slots for its domestic airlines and thus limit airport access.  Yet even with these restrictions looming, airlines on both sides of the Pacific are hoping that a deal can be reached which will satisfy the Department of Transportation's longstanding requirement to only grant antitrust immunity to alliance agreements involving carriers from States which have signed an open skies treaty.  Will an agreement with elements of managed trade be enough?  Hopefully Japan will forego these last vestiges of air transport protectionism so we won't have to find out.

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