Carriers Plan Transpacific Ventures As U.S., Japan Finalize Open Skies Pact

The United States and Japan this weekend finalized the terms of the Open Skies agreement they began negotiating in May. The deal lifts restrictions on airline service between the two countries and already has prompted plans for transpacific antitrust-immune joint ventures.

Once enacted, the deal will enable U.S. and Japanese carriers to operate between both countries without restrictions on number of flights, level of capacity or pricing. The U.S. Department of Transportation said the deal also would "provide unlimited opportunities for cooperative marketing arrangements, including codesharing," lift operating restrictions at Tokyo's Narita International Airport and open up new opportunities at Haneda Airport, which is closer to Tokyo's city center but restricts airline access.

"Both the United States and Japan must affirmatively act in order to put the agreement into effect," DOT said in a statement without giving specifics on timing.

Japanese and U.S. carriers already are setting into motion arrangements to operate joint ventures immune from antitrust rules on setting prices, determining schedules and planning networks, similar to the transatlantic agreements that followed the United States and European Union's Open Skies agreement.

Struggling and cash-starved, Japan Airlines continues to mull two $1 billion-plus proposals, one from Oneworld partner American Airlines and the other from Delta Air Lines, whose SkyTeam alliance is the only one without a major Japanese carrier. JAL has been mum on which partner it will choose, but in a statement on Saturday said it would apply for antitrust immunity with "a strategic U.S. partner as soon as possible, so as to seize this opportunity to strengthen our network and bring added benefits to our valued customers."

United Airlines, whose Star Alliance partners include Japan's number-two airline, All Nippon Airways, is planning a three-way joint venture that also would include Continental Airlines. United said the carriers would file an application for those rights "shortly."

United president and CEO Glenn Tilton in a statement said, "We have the right partners and look forward to forming a joint venture across the Pacific with our longtime partner All Nippon Airways and Continental, which joined the Star Alliance in October, providing our customers with access to more destinations and convenient schedules."

DOT said the long-standing 1952 bilateral agreement between the United States and Japan that was "greatly expanded" in 1998, still restricted carriers "on capacity, routing, pricing and codesharing."

"Achieving Open Skies with Japan, a major U.S. transportation and trade partner, has been a long-standing U.S. goal and is good news for air travelers and businesses on both sides of the Pacific," said Transportation Secretary Ray LaHood. "Once this agreement takes effect, American and Japanese consumers, airlines and economies will enjoy the benefits of competitive pricing and more convenient service."