U.S., Japan Sign Open Skies Air Travel Agreement

Oct. 25 (Bloomberg) -- Japan and the U.S. signed an Open Skies treaty erasing limits on flights and setting the stage for greater collaboration between the nations’ airlines.

“I am optimistic that we will see an increase in the numbers of passengers traveling between our countries,” U.S. Ambassador John Roos, after signing the treaty in Tokyo.

Japan Airlines Corp. and American Airlines as well as All Nippon Airways Co. and the airline units of United Continental Holdings Inc. plan to collaborate on scheduling and sales following the treaty that cuts restrictions on routes flown by about 10 million travelers in the year ended March 2009. Japan is liberalizing air travel to boost tourism and as its busiest airports add landing slots.

“It opens up great opportunities for airlines on both sides of the Pacific,” Geoff Tudor, principal analyst for Japan Aviation Management Research, said by phone today. “It enhances each carrier’s network and in turn, that helps customers who can make journeys through one carrier that perhaps they couldn’t have made before.”

U.S. and Japanese carriers will offer scheduled flights from Tokyo’s downtown Haneda airport to U.S. cities after the opening of a new runway this month. Narita airport, which also serves Tokyo, boosted slots by 10 percent to 220,000 earlier this year. The hub plans to increase capacity to 300,000 by the fiscal year starting April 2014.

Antitrust Immunity

Japan granted antitrust immunity for the JAL-American and ANA-United Airlines-Continental Airlines tie-ups last week. The U.S. earlier this month granted preliminary immunity, which is subject to final approval after a 21-day comment period. Immunity would allow airlines to jointly set schedules and fares without being prosecuted for anti-competitive practices.

Delta Air Lines Inc., which already has a hub in Tokyo, missed out on signing up a Japanese partner after JAL rejected its overtures earlier this year to instead stay in American’s Oneworld alliance.

The planned tie-up will boost JAL’s sales by $100 million a year, American, a unit of Fort Worth, Texas-based AMR predicts. All Nippon declined to forecast the revenue boost from its tie-up with United.

The agreement is the first major overhaul of a 1952 aviation treaty between the U.S. and Japan since 1998.

The two countries signed a draft Open Skies treaty in December. Sumio Mabuchi, Japan’s transport minister, signed the agreement today.

Restrictions wiped away under the accord include one that lets only three U.S. carriers, Delta, United and FedEx Corp., serve all Japanese markets with unlimited flights.

Hawaiian Holdings Inc., United Parcel Service Inc. and US Airways Group Inc. are among other U.S. carriers that no longer face flight limits under the Open Skies pact.

To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net