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Saturday, February 13, 2010

JAL and AA filed for ATI application with DOT

Japan Airlines and American Airlines has filed for antitrust immunity (ATI) application with the US Department of Transportation (DOT) on February 13 2010. JAL and AA will also apply for ATI with the Ministry of Land, Infrastructure, Transport and Tourism in Japan.

If the ATI is approved (which is highly likely), JAL and AA will implement a Joint Business Agreement (JBA), which JAL and AA will cooperate closely on flights between Asia and North America. However, JAL and AA will continue to operate as separate legal entities. They will only coordinate on fares, services and schedules. This will allow them to attract new customers, boost revenues, and lower costs. And the JBA will be "metal neutral", which means JAL and AA will share the costs and split the revenues no matter who is the operator of the transpacific flight!

What does it mean to passengers? It means new routes, more codeshares, better connectivity for passengers. Routes that are currently not economically viable for either of the airlines might become viable under the immunized JBA. So in some ways, this will create more competitions (at least theoretically). There will be changes to JMB and AAdvantage programs to allow reciprocal benefits, possible changes include elite bonus, miles upgrade, higher mileage accumulation rate (for AA members), etc on each others' flights. But no details have been given at this point. I guess we can watch for how AA and BA's programs change with ATI (assuming they get it before JAL and AA do).

Below are the quotes from JAL COO and AA CEO from AA Press Release

Masaru Onishi, JAL COO: "With immunity to enter a JBA, Japan Airlines and American Airlines will be able to cooperate more tightly in raising the quality of our services and thus encourage healthy competition in this promising region for the industry. Furthermore, not only will both carriers be able to improve operational efficiency but most importantly, our valued customers will receive greater benefits and convenience which we hope will place us in a position to always be the airlines of their choice."

Gerard Arpey, AA CEO: "An immunized JBA will benefit the public, offer new competition in the fast-growing Asian aviation marketplace and strengthen the relationship between American and Japan Airlines, which will support JAL's successful restructuring. It will improve customer choice by giving the oneworld® Alliance, of which American and JAL are key members, strong hub operations at Tokyo, thus allowing more vibrant competition with other global alliances in northeast Asia and beyond."

So next time if I want to help out JAL, I would have to fly to Hong Kong (which part of the revenue will go to JAL) and buy another ticket to Japan (100% goes to JAL). You might think that's crazy, but the truth is I have done exactly this last year (think about LAX-NRT-HKG-KIX/ITM-HND-HKG-NRT-LAX) LOL On difference is now JAL will get less revenue from me :(

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