In an attempt to flout the stalled US-Japan aviation relationship, airlines from the two countries are forming partnerships that could make alliance-building the issue that forces bilateral liberalisation.
It is Delta Air Lines' proposed codesharing alliance with All Nippon Airlines, announced at the start of August, that is the primary catalyst. But growing ties between other carriers like American Airlines and Japan Airlines are also adding market-based momentum which, several carriers hope, will bring more competition to the US-Japan aviation arena.
Whether by coincidence or as a direct result, the spate of alliance building occurred around the Japan-US mini-deal that narrowly averted sanctions on each other's cargo flights. The deal in late July granted FedEx seven new cargo routes beyond Japan, including key routes to Subic Bay from Tokyo and Osaka. In return, Japan gained the Kansai-Chicago cargo route, and both sides agreed to start talks on revised cargo rights in September.
Two weeks before the cargo showdown, JAL, which along with Nippon Cargo was targeted for US sanctions, sealed a cargo alliance with American, effective 1 September. Each carrier will act as the other's general sales agent, a move both claim will give shippers seamless service from much of the US, Caribbean and Latin America to Japan, Thailand, and eventually most of southeast Asia. Broader access to markets beyond Japan depends on successful US-Japan negotiations, which carriers like American hope will extend to passenger services. But Washington disputes claims by Japanese officials that, as part of the cargo deal with the US, a commitment was made to renegotiate passenger service rights.
Like Delta and ANA, American is an 'MoU carrier,' lacking the unlimited capacity available to incumbents like Northwest, United and JAL which operate under the original 1952 bilateral. A broad American-JAL alliance, including passenger service, has been under discussion for more than two years. The two airlines appear to be involved in a slow process to build a broad cooperation, which began last year with participation in each other's frequent flyer programme.
Besides the cargo and FFP links, JAL and American agreed in August to link their respective computer reservation system, AMR Corp's Sabre and JAL's Axess International Network (AIN). Under the agreement, Sabre will acquire 25 per cent in AIN, which will have exclusive license to market all Sabre's pricing and booking capabilities to travel agents in Japan. The phased process of linking the systems is scheduled for completion by mid-1996.
The threat of sanctions from either side against the cargo operations of Nippon Cargo and Northwest, during the bilateral dispute, apparently focused the year-long talks between the two carriers on proposed joint cargo flights between Osaka and Chicago. The chances of Tokyo awarding the new route to ANA in September appear good - a move which could clear the way for the partnership with Northwest. The Minnesota-based carrier also has pending a proposal to codeshare with Japan Air System for domestic feed in Japan.
Officials working on the Delta-ANA codesharing alliance say that domestic Japan feed is also desirable for the partnership. However, this, along with beyond-Japan codesharing services that would put Delta in touch with points throughout Asia, is a long-term goal that is currently hindered by the strictures of the US-Japan bilateral.
For now, the two carriers plan to cooperate only in the Japan-US market, a strategy anchored by a blocked-space codesharing arrangement that has become the hallmark of Delta's many alliances in Europe and Latin America. The two airlines will each buy seats on the other's flights between Los Angeles and Tokyo, with ANA operating the aircraft on seven weekly services and Delta on the remaining six. Also, the two airlines plan to cooperate on Osaka-US services as rights become available. Participation in each other's FFP starts in October.
While the alliance is limited at this point, one Delta executive labels it 'very significant for the long term.' As part of a broad system restructuring (see opposite), the airline has announced plans to end services to Bangkok, Hong Kong and Taipei, a move that sources say was done in part because of the potential for the ANA alliance. The partners believe that a renegotiation of the US-Japan bilateral will occur in the next year, but a lot of persuasion is needed on both sides of the Pacific.
Source: Airline Business
