American Airlines and Delta vie for Japan Airlines

Posted on 14. Sep, 2009 by in Airlines, Blog

Over the weekend word leaked that both American Airlines (AA) and Delta (DAL) are competing to buy an interest in troubled Japan Airlines (JAL). AA is looking to keep its One World code share partner; DAL is attempting to wrest JAL away for its own alliance. The prize is Narita and its connecting flights to the rest of Asia.
The airlines are not the only players; the Japanese government(s) is involved as is a pending open skies agreement. To add to the complications the Japanese government just changed; the newly elected Democratic party of Japan takes over Wednesday.

It is apparent by quotes that the old government favored a deal with DAL. DAL recently bought Northwest Airline (NWA); NWA had a large presence at Tokyo’s’ Narita Airport with fifth freedom rights. Fifth freedom rights allow NWA, now DAL, to pick up passengers in Narita and fly them to another country. A deal between DAL and JAL would give them a strangle hold on the Narita hub before the open skies agreement is enacted. This would make the restructuring of JAL much easier and more effective.

No doubt this will be a front burner issue for the new government in Japan. As of yet they have not tipped their hand, except to have run on a platform promising: “greater scrutiny of the use of government funds”.

There are supporters in the Transport Ministry and JAL for both options. Reading between the lines, it seems DAL currently has the edge. Not only because of their larger presence in Japan, but also due to the fact they are the world’s largest airline and are growing their network. AA’s network has shrunk; they are trying to expand their reach via Joint Business Ventures (JBV). As of yet these JBVs have not been approved, and there is resistance in the US Justice Department.

JBVs are “virtual mergers”; they allow airlines to merge without the International ownership issues involved in a standard merger. This will not be a singular event, expect reaction by whoever looses the bid for JAL and other airlines. We are entering into the final phase of deregulation. Domestic carriers will move aggressively to consolidate inside their own borders and then enter into JBVs or expand internationally.

No Responses to “American Airlines and Delta vie for Japan Airlines”

  1. Rick 14 September 2009 at 16:24 #

    I have a very dim view of Narita Airport. It is cold / too big / difficult for transient travelers. Every single traveler to Asia that I know will not go there if Tokyo is not their ultimate destination. I actually preferred the old downtown Haneda Airport, but now that is domestic only & has been for 30 years I think.
    Anyway, I wonder how successful anybody will actually be trying to use Narita as a hub into the rest of asia. I know JAL did it, but that’s JAL. It’ll be another thing with AAL or DAL. Just my humble opinion.

  2. Chip 14 September 2009 at 17:08 #

    Northwest has done it for years via their fifth freedom rights. Nobody gives fifth freedom rights anymore, also known as cabatoge. The original lines Pan Am, TWA, NWA, etc had them because they were the only game in town. In fact TWA had a European hub into the 90’s If memory serves. As countries developed their own airlines they protected them via regulation. Now regulation is unwinding (open skies); but IMO nobody has the capital or desire to set up a new hub overseas. They are fighting over the code share with JAL. If they can take it the next step to a Joint Business Venture then they can set schedules (illegal now) and share revenue. In short expand their network with no or little investment.

    I share your opinion of Narita. I lived in Japan while attached to the USS Midway. In fact my second son knocked his front tooth out there the night we left, but thats another story……

  3. Rick 15 September 2009 at 07:23 #

    I don’t know the numbers, and I know many Northwest flight crew, but I think NWA have lost their luster in Asia long ago. Narita may work for them…it’s possible….but I tend to doubt it these days. Most folks I know would prefer UAL or Thai or Cathay Pacific….just better service and a better experience. Anyway, just the humble experience of an old traveler.

  4. Chip 15 September 2009 at 08:51 #

    I hear Singapore is the best! US crews have been beat down and demoralized for years. The constant shrinking, loss of pay and retirements etc. is the recipe for disaster in a service based industry. USA based airlines are OLD.

    Here are a few numbers I’ve heard recently at my airline: We now have only one flight attendant in their 20’s, no pilots. In fact we have few in their 30’s (pilots). 90% of AA pilots will be gone (even with age 65) in the next 12 or so years, 90%.

  5. Rick 15 September 2009 at 15:17 #

    Wow, those numbers are scary. Yes, Singapore Airlines is tops….I forgot to mention them. Personally I like Thai Airways very much as well. Cathay Pacific is no slouch either.

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