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Tuesday, January 26, 2010

DOT: No guarantee for JAL ATI

Nikkei.com reports today that the US Department of Transportation (DOT) has informed japanese Civil Aviation Bureau that there is no guarantee that they will approve Japan Airlines' antitrust immunity. DOT has to completely review JAL's application before making any decision.

The WSJ and Airline Biz Blog have similar reports earlier last week suggesting the same thing. This is definitely different from the view of Japan's Aviation Bureau, who has repeatedly says both JAL and ANA needs to have ATI approved for Japan and US to have open skies treaties. But during the negotiations, US has made it cleared that open skies is a requirement of ATI application, not the other way round. That's why DOT has to clear things up once again.

"As we have consistently said from the outset of the negotiations, the U.S. government is not in the business of picking or choosing partners for our carriers and we most certainly have not and can not make any guarantees that any or all applications for ATI would be approved by DOT, including the one currently before the Department," says DOT in some "talking points."

"So that there is absolutely no misunderstanding: it is possible that one or more ATI applications by U.S. and Japanese carriers could be disapproved by DOT," it said. "There will be no prejudgment of these cases, either as to the substantive outcome or the schedule for a decision."

So Japan won't implement the open skies without ATI for both JAL and ANA. DOT only looks at the ATI case by case, don't care about the outcome and there's no timeline for approval. US and Japan is supposed to implement the open skies treaty by October 2010 when Haneda opens its 4th runway. So what's going to happen if JAL hasn't got ATI by then? (Yes I don't care about ANA LOL) ANA has already submitted its application while JAL is still picking its partner...

If JAL is to pick AA as its partner, DOT will probably approve the ATI without any issue. However, if it's Delta that JAL picks, then AA will "object vigorously" and put on a dirty fight. The main argument is AA said JAL and Delta will control over 62% of the Japan-US market, but DL said they will only control 44%. So why is there a difference? Because Delta doesn't count beach markets like Hawaii and Guam while AA does. Delta thinks these beach markets are competing with other vacation markets in Asia.

IMHO, Hawaii shouldn't count as part of the Japan-US. They just attractive different kind of passengers. That's why JAL uses JALways brand to operate flights to Hawaii! Hawaii and Guam are just resort destinations like Oceania. The continental US market belongs to a completely different segment. That's why JAL's timetable has ground Hawaii with Guam and Oceania, not with the rest of North America.

If I have to choose between open skies with duopoly and no open skies, the choice is pretty obvious. But to be honest, it doesn't affect me much. Open skies or not, I still fly on JAL (assuming they still fly to LAX and HKG). Maybe the only difference is the price I pay on my ticket. JAL hasn't been the cheapest choice for a while anyways LOL

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