Air Transport World

Japanese liberalization rapidly opening airline opportunities. (foreign airlines in Japan)

Japanese liberalization rapidly opening airline opportunities

U.S. airline desire to increase Pacific routes plus domestic Japanese business needs in the past two years have produced more air services between the two countries than would have been thought possible before 1985. The question now is how much further things will go.

The U.S. government had wanted to expand passenger air services to and through Japan for many years. But it kept encountering opposition. First there was Continental's takeover of Pan Am's Micronesian services in the early 1970s and the battle that produced. United Airlines' fight to get into Tokyo is another example.

Gradually, though, in the 1970s and early 1980s external and internal factors began working at the protective web woven by the Japanese government. The development of the Asian countries' economies, led by Japan, meant a restrictive air policy held back trade. Competition from other Asian airlines meant Japanese regulation and enforcement limited Japan Air Lines' effectivity. Japanese affluence produced increased travel demands. Japanese passenger carriers Toa Domestic Airlines and All Nippon Airways (ANA), tired of their controlled growth, were no longer content with crumbs from JAL's table. A new firm, Nippon Cargo Airlines, wanted to break up JAL's lock on Japanese all-cargo rights.

In the U.S., the growing trade imbalance with Japan was producing complaints from Congress. That meant that the executive branch, while eager to take advantage of pressures on Japan, could not be seen "giving away' air rights to the Japanese without receiving something in return.

Because of years of getting nowhere with the Japanese, there was plenty of pent-up U.S. demand. Airlines wanted to add to their domestic or Atlantic expansion with routes on the booming Pacific. Federal Express wanted to fly small-packages between the two countries. Despite opposition by long-time incumbents Northwest, Pan Am (which would eventually be sold to United) and Flying Tiger Line, the U.S. generally wanted more home-grown competition to counter the influx of newly emerging Asian carriers to mainland U.S. routes.

There are people on both sides of the Pacific who say it was solely American influence that broke the logjam and was responsible for the ground breaking 1985 memorandum of understanding (MOU). Some people at Japan Air Lines (JAL) say their government would not have permitted so much Japanese competition for JAL were it not for the U.S.

That is not really the full picture. In 1971 the government permitted ANA to begin operating international charters to supplement its domestic service. It knew then ANA would not be content to remain so restricted once it completed the ritual of "proving' itself able to fly schedules abroad. Also during the 1970s Japan agreed to permit two carriers each from the U.S. and Japan to serve Saipan/ Guam.

Then there was Nippon Cargo Airlines (NCA). It took the airline five years to receive a certificate. But NCA would not have filed unless it thought the government had changed its attitude toward JAL's international monopoly. A Japanese government official told ATW, "The creation of NCA was a watershed. It set the direction of multiple (Japanese) airlines.' A U.S. industry negotiator reflects, "As soon as the (1984-85) talks included significant (passenger) route expansion, you knew they (the Japanese) had long since decided they would field additional international (passenger) airlines. …

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