At long last, Tokyo and Washington have settled their aeropolitical differences with a substantive open skies agreement that extends well beyond a 'mini-deal'. But Europeans are fuming at the deal's valuable concessions to the US.

The new US-Japan open skies deal penned in February 1998 has helped right the 1952 bilateral, which was heavily balanced in favour of the US. All Nippon Airways and Nippon Cargo Airways have now joined Japan Airlines to mirror the US side, made up of two combination carriers, Northwest and United, and one all-cargo carrier, Federal Express.

Tokyo secured the deal by effectively giving all six incumbent carriers open skies. The deal states these carriers may now fly 'between any US and Japanese city through any or no intermediate points and beyond to anywhere, without restrictions on capacity or frequency.'

Japan may now have won parity with the US but the fifth freedom aspects of the deal represent a remarkable Japanese concession, given the years of wrangling over how much fifth freedom traffic US airlines could carry. Incumbents, as well as so-called 'MOU' carriers, also gain first, second, and third-country codeshare rights. The latter is surprising given Tokyo's refusal to allow third-country codesharing by anyone else. Codeshare frequency limits and pricing are the only remaining restraints.

The US MOU carriers have also emerged as big winners from the deal. All-cargo Polar Air and United Parcel Service gain rights to carry cargo beyond Japan to several other Asian cities. American, Continental, and Delta may add 90 weekly round trips between the US and Japan, representing a capacity jump of nearly 200 per cent. The US may designate another MOU carrier now, and a second one in two years.

Only 28 of the 90 new MOU flights are to Tokyo's Narita airport. The rest are to Osaka's Kansai and other Japanese cities such as Nagoya and Fukuoka. Washington has already awarded seven weekly Tokyo flights to each of the three MOU carriers on an interim basis, apparently reserving the remaining seven for the new designee, expected to be TWA.

While US airlines may be pleased, European airlines are are outraged at the way slots have been redistributed under the deal. A secret undertaking by the Japanese transport ministry allows FedEx to lease or loan 30 inactive freight slots to other UScarriers. The move contradicts Japan's previous steadfast insistence that it would not grant more slots for new MOU flights. US airlines already control a third of Narita's slots.

Japan's transport ministry had recently adopted a 'use-or-lose' rule allowing airports to retake slots which an airline did not use at least 80 per cent of the time. Although FedEx's 30 slots fit that description, Tokyo agreed to treat them as belonging to US carriers as a group so long as FedEx loaned or leased but did not permanently transfer them to another airline.

Europeans are enraged at what they view as USfavouritism. UK Prime Minister Tony Blair raised the issue with Japan's Prime Minister Ryutaro Hashimoto in mid-January, followed by the EU trade commissioner, Virgin Atlantic's external affairs director, and other European officials. The complainants dispute Japan's view that slots belong to countries rather than individual carriers.

David Knibb

Source: Airline Business