Four major U.S. airlines would receive new or increased access to Japan under an interim agreement that U.S. and Japanese negotiators believe could be signed as early as next week.
Although the agreement would be a boon for United, American and Continental Airlines and Delta Air Lines, it’s a bust for Northwest Airlines, which operates a virtual base in Tokyo and dominates service between the U.S. and Japan.
The financial impact of the agreement is staggering–as much as $8 billion a year, according to the Economic Strategy Institute, a Washington, D.C.-based think tank.
For Chicago and O’Hare International Airport, it means a doubling of the current 20 flights to Tokyo per week and giving United expanded rights to pick up passengers in Japan and fly them to other destinations in Asia. Currently, the Chicago-to-Tokyo route is served by seven Japan Airlines, seven Northwest and six United flights each week.
“This will make a big difference to a major industry in both countries,” said Stacey Spencer, who has been an observer at the negotiations, representing the Midwest-Asia Aviation Coalition. “It will really open up aviation internationally.”
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The coalition represents 400 manufacturers and six Midwestern states in the negotiations, which began more than two years ago in an effort to permit expanded service.
The sixth round of negotiations are to resume next week in Tokyo; an industry source involved with the talks said most of the terms of the agreement have been settled.
Existing Japanese-U.S. aviation agreements name specific airlines as “incumbent” carriers, allowing them unlimited flights between the countries, subject only to landing slot restrictions at airports.
Currently, the only U.S. carrier with full incumbent status is Northwest Airlines, which offers 140 flights weekly from the United States to Japan.
Northwest owes its incumbent position in Japan to the 1952 Air Services Agreement, which granted the right to fly between the countries to JAL, Northwest and Pan Am (Pan Am sold its rights to United in 1986 for $750 million).
But under the draft agreement, United gains the same status as Northwest; in return, JAL will be allowed to pick up passengers in the U.S., just as United and Northwest will be allowed to do in Japan.
This will allow JAL to expand service on its Tokyo-to-O’Hare route, among others.
All Nippon Airlines, which currently doesn’t serve the U.S., would receive permission to begin such service and be allowed to pick up passengers in the U.S. and continue on to other destinations.
Three other airlines– American, Delta and Continental–would be allowed to begin or expand service to Japan, pending Department of Transportation approval.
Currently, American offers flights to Tokyo from San Jose, Calif., and Seattle. With the DOT’s permission, American plans to add daily service to Tokyo from Chicago and Dallas; Delta will begin daily service from Atlanta, and Continental will begin daily service from Houston, another person close to the talks said.
“The proposed air service agreement represents a significant victory for the United States and Japan as well as for their communities and consumers,” said Gerald Greenwald, chairman and chief executive officer of United’s parent, UAL Corp.
“It will also put an end to decades of disputes between the two countries over an appropriate balance of commercial aviation rights.”
Landing rights at overcrowded Narita airport near Tokyo previously have been a sticking point in aviation negotiations, but the industry source said that Japanese aviation authorities have suggested they will make additional landing slots available to U.S. carriers.
According to the Midwest-Asia coalition, each month that the agreement is delayed costs the U.S. $403 million in lost economic activity.