WASHINGTON -- After months of protracted negotiations, the U.S.
and Japan agreed on the framework for a bilateral air agreement
that will permit existing carriers in the market to expand their
U.S.-Japan service, while allowing code sharing in the U.S.-Japan
market for the first time.
In addition, the U.S. gained the right to name two more
passenger carriers for the market, one in 1998 and another in two
years.
Some of the new services may be slow in developing, however,
because the agreement does not guarantee access to scarce take-off
and landing slots at Tokyo's congested Narita airport. In the words
of Northwest's executive vice president Michael Levine, "because
there are no net new slots, there will be no net new service" for a
while.
For U.S. carriers, the agreement confirms the rights of the
long-time incumbents, Northwest and United, to operate from any
U.S. point to any point in Japan, and beyond to any point in Asia
and Oceania, without restriction. The three more recent entrants,
American, Delta and Continental, will continue to operate under
frequency restrictions but they will be permitted to boost service
from a combined 46 weekly flights to 90.
As for making use of the new rights, Northwest said it was
unlikely to add service to Japan this year although it will launch
long-planned beyond services to Kuala Lumpur and Jakarta via Osaka.
United plans to use its new flexibility to boost its Chicago-Tokyo
frequencies from six weekly to twice daily beginning April 5.
American is expected to seek Chicago-Tokyo rights to compete with
United.
Continental is seeking nonstop routes to Tokyo from Houston and
Newark. Delta will be seeking Atlanta-Tokyo nonstop rights and
routes from Portland to Osaka and Fukuoka. TWA wants to be a new
entrant and has an application on file for St. Louis-Tokyo.
For Japanese carriers, the agreement confirms the right of JAL
to serve any point in the U.S. without restriction. All Nippon
Airways, which has limited U.S. access, gains the same unrestricted
rights.
The new pact is likely to spawn a raft of code-sharing
relationships. It permits code-sharing between and among airlines
of the U.S., Japan and of third countries.
American already has marketing ties with Japan Airlines; ANA is
a candidate for membership in United's Star Alliance, and Northwest
is in a position to develop its ties with Japan Air Systems and
with prospective alliance partner Continental.
On distribution issues, the Japanese government retains more
regulatory control over air fares than the U.S. would prefer, but
Japan agreed to allow U.S. airlines more flexibility in their
dealings with Japanese wholesalers and travel agents.
Japan also guaranteed the right of U.S. carriers to set up their
own marketing channels for ticket distribution in Japan. Japan
agreed to meet with the U.S. no later than May 1 to discuss
specific proposals for further pricing flexibility.
Michael Milligan and Michele McDonald contributed to this
report.
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Clinton Praises Air Agreement
WASHINGTON -- President Clinton, who doesn't take notice of most
international air accords, praised the new U.S.-Japan aviation
agreement for promising "more choices for American business
travelers and tourists alike."
According to the administration, U.S.-Japan is a $10 billion air
market that serves nearly 12 million passengers a year. The
opportunity created by the agreement is expected to increase U.S.
carrier revenue by about $1 billion a year and increase the benefit
to consumers by about $300 million.
Clinton said the agreement "reflects my policy of opening the
world's markets in areas where American companies are most
competitive."
Although the agreement falls short of the unrestricted access
allowed under an "open-skies" regime, a State Department official
said the pact brings "dramatic deregulation."