AA, Japan Airlines Ink Code Pact

<B> AA, Japan Airlines Ink Code Pact</B>

By Jay Campbell

American Airlines and Japan Airlines last week announced a code-sharing alliance that builds on the carriers' existing frequent flyer, CRS and air cargo relationship.

If given government approval by the U.S. Department of Transportation and the Japanese Ministry of Transport, the cooperation will involve hundreds of routes as the carriers will place their respective booking codes--AA and JL--on each other's flights between the U.S. and Japan, JAL's flights into Japan and Asia and AA's flights into the U.S, Canada, Mexico, the Caribbean, Latin America and elsewhere.

"Code sharing will represent the successful culmination of a lot of diligent effort by American and Japan Airlines to forge a comprehensive alliance that will strengthen our respective companies and provide greater access and increased value for travelers," said American's chairman and CEO Robert Crandall. "We have looked forward to this day with keen anticipation."

The travel industry and its observers, too, had anticipated the deal, envisioning the rollup of Japan Airlines with American's other prospective and such existing partners as British Airways, Canadian Airlines, Qantas, Iberia and LOT Polish.

"This isn't unexpected, but it gives each carrier something it doesn't have," said airline analyst Donald Garvett in New York. "Years ago, interline traffic was significant. Then, with the retrenching to hubs, multilateral interlining was declining. Now it's being replaced by bilateral and trilateral code sharing."

Japan's number two carrier, All Nippon Airlines, has a four-year-old frequent flyer relationship with Delta, but a number of sources, including Continental chairman and CEO Gordon Bethune (<I>BTN</I>, Feb. 23), have suspected ANA will sign a deal with United. The AA-JAL announcement could expedite those talks.

AA said it and JAL have been working toward an expanded alliance since 1993. In 1995, the carriers began a reciprocal frequent flyer program, which will be expanded under the new arrangement. Also, Sabre and JAL's CRS, Axess, signed a joint venture in September 1995.

The AA-JAL deal was made possible by the new U.S.-Japan bilateral, which allows U.S. and Japanese carriers to code-share for the first time. In the weeks since the bilateral's signing, carriers have scrambled for route rights and code-share deals. The Continental-Northwest partnership, Delta-TWA and an announced--but subsequently canceled--application by US Airways to code share with AA and United to Japan all stem from the new bilateral.

"Clearly the Japan agreement is causing the airline business to change rapidly, and overall it is increasing competition," said Garvett.

DOT has awarded authority for U.S. carriers to fly a number of new Japan routes. Serving Tokyo will be American from Chicago beginning May 1; Continental from Newark beginning in November and Houston in December; Delta from Atlanta beginning June 3; and United from Chicago to Osaka. Also, United will expand its existing flights between Chicago and Tokyo from six a week to two daily.

Applications are still pending for Delta service to Fukuoka and Osaka from Portland beginning Nov. 1 and to Tokyo from Cincinnati and New York-JFK--and to Osaka from Atlanta--beginning in 1999. TWA is seeking authority for daily flights to Tokyo from St. Louis, beginning June 1.