The Department of Transportation has rejected an application
by Hawaiian Airlines and Japan Airlines (JAL) to operate a transpacific joint
venture.
The final decision, blocking the carriers’ request for
antitrust immunity, affirms the tentative rejection issued by the department in
October.
Antitrust immunity would have allowed Hawaiian and JAL to
jointly market, schedule and operate flights.
In their original application, the two carriers had sought
authority to jointly operate nonstop flights between Japan and Hawaii, as well
as connecting flights from Hawaii, through Japan to 10 other countries in Asia.
The DOT rejected the proposal, concluding that the joint
venture would not offer public benefits that carriers couldn’t offer through
non-immune commercial agreements. JAL and Hawaiian are already codeshare
partners.
In response to that rejection, the carriers expanded the
proposed joint venture to include nonstop flights to the 10 Asian countries
beyond Japan, as well as two new countries; India and Russia. They also added
Tokyo-Guam, Hawaiian routes to three South Pacific destinations, and decided to
include JAL’s low-cost subsidiary ZIPAIR, which flies Honolulu-Tokyo.
On Friday the DOT nevertheless stuck with its denial. There
isn’t evidence, it said, that the new proposals would encompass service they
won’t offer absent antitrust immunity. In addition, the DOT rejected arguments
by the JAL and Hawaiian that because their codeshare agreement has fared
poorly, their level of partnership will decrease in the absence of antitrust
immunity.
“The poor performance of the current partnership suggests
implementation and strategic challenges that must be addressed before the
department can determine the impact of a grant of [immunity],” wrote Joel
Szabat, assistant DOT secretary of aviation and international affairs.
In the U.S-Pacific
market, JAL already operates a joint venture partnership with American for
mainland service. Delta and Korean and All Nippon Airways and United also
operate anti-trust immune partnerships.
In a statement, Hawaiian said the DOT is preventing it and
JAL from entering into the same type of joint venture it has already allowed
for the major global alliances.
“This decision stifles competition and ultimately hurts
consumers by preventing both Hawaiian and JAL from offering more choice and
greater access for thousands of travelers flying each day between Japan and
Hawai’i, and beyond,” the company said. “We will continue to evaluate
opportunities to enrich our partnership and deliver greater value to our
guests.”