Japan Airlines To Stick With Oneworld, Forge Joint Venture With AA

Following more than two months of indecision as to whom it would pick as its U.S. alliance partner, Japan Airlines today reaffirmed its loyalties to Oneworld and affirmed plans to bolster its standing in that alliance through a transpacific antitrust-immune joint venture with American Airlines.

The decision to select American's $1 billion-plus offer of financial aid over a competing proposal from Delta Air Lines and its SkyTeam alliance ends months of speculation as to which carrier would emerge as the U.S. partner to Japan's largest carrier, which in that timeframe entered the Japanese equivalent of bankruptcy protection and installed a new management team, anchored by chairman Kazuo Inamori and president Masaru Onishi, to plot a return to solvency.

American Airlines CEO Gerard Arpey said today that the carrier soon would finalize and present to the U.S. Department of Transportation and Japanese authorities the carriers' plans to operate a joint venture through which it would jointly sell, plan networks and share revenue on transpacific routes with JAL. That plan would compete with a similar joint venture—the proposal for which already has been filed with DOT—by Star Alliance carriers Continental Airlines, United Airlines and Japan's number-two, All Nippon Airways.

Though JAL's decision leaves Delta and SkyTeam without a Japanese partner, Delta, thanks to its acquisition of Northwest Airlines, commands the highest marketshare of any single carrier between the U.S. mainland and Japan. According to December 2009 OAG data for seat share between the two countries—excluding Hawaiian markets—Delta held nearly 31 percent marketshare without an Asian partner. The combined marketshare of JAL and American would total just shy of 26 percent of the market, while the remaining alliance clustering of ANA, Continental and United would total 36 percent seat share.

Delta is "well positioned as the number-one carrier between the U.S. and Asia," the carrier said in a statement today. "Customers can continue to count on Delta for unmatched access to Japan, with nonstop service between 10 U.S. destinations and Tokyo. With recently announced plans to invest $1 billion in our product, Delta remains committed to providing a leading option for travel across the Pacific."

Onishi, JAL's new president, in a statement today said, "We have analyzed this issue in great detail, and we are excited at the prospects in terms of the convenience and benefits for our customers. We also firmly believe that the advantages of this development with American Airlines can strongly support JAL at a time when we are striving towards the revival of our business, which we are determined to achieve. We certainly look forward to a deeper, more mutually beneficial relationship with our long-time partner."

In addition to its planned joint venture partnership with American Airlines, JAL also said it would "fortify its relationships with other partners in the Oneworld alliance."

British Airways CEO Willie Walsh in an interview with BTN today confirmed intentions to forge an antitrust-immune joint venture with JAL between Europe and Japan. "I've met personally with the new chairman, Dr. Inamori, and told him we were very much committed to building a stronger relationship with JAL," Walsh said.

"We are going to provide further access to our network in Europe, so you'll see more codesharing with JAL on our European routes, but we also felt there was an opportunity for us to pursue a joint business between Europe and Japan. I think that's the way alliances are developing now. More and more are going down the joint business route. That's an opportunity we'll continue to pursue jointly with JAL."