Wednesday, November 18, 2009

SkyTeam's Bold Move

A new story in the Wall Street Journal is reporting that Delta Air Lines and the other members of the SkyTeam Alliance are willing to provide over $1 billion in funding to the struggling JAL if it jumps ship from the oneworld Alliance.  See Doug Cameron & Yoshio Takahashi, Delta, SkyTeam Offer Funding Deal to JAL, Wall St. J., Nov. 19, 2009 (available here). 

The offer is no doubt enticing for the perennially troubled JAL.  SkyTeam has a larger route network than oneworld and, with respect to the lucrative transatlantic market, it has already overcome the regulatory hurdle of receiving antitrust immunity from the U.S. Department of Justice.  oneworld's future still hangs in the balance of a postponed final order from the DOT.  (Like oneworld, however, SkyTeam remains under competition scrutiny from the European Commission.)  Japan's other major international carrier, ANA, is already part of Star--the largest of the three alliances.  Arguably, if JAL wants to keep pace with its chief rival, it would be in a better position to do so with SkyTeam.

At the same time it is important to bear in mind that neither JAL nor ANA are able to deepen their participation in any alliance since they remain ineligible for antitrust immunity from the DOT.  As a matter of policy, the DOT only grants immunity for international intercarrier agreements where the home States of all the parties have an open skies agreement with the U.S.  Cf. U.S./EC Air Transport Agreement, Memoranda of Consultations, para. 48, 2007 O.J. (L 134) 4.  As discussed previously on the blog, the most recent round of air transport negotiations between the U.S. and Japan failed to finalize such a treaty.  See here.  Until some sort of deal can be brokered which would satisfy the DOT's longstanding open skies requirement, both Japanese carriers will have to remain content with their more limited alliance roles.

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