Mineta: JAL should stick with American

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Delta tieup may not be immune from antitrust consideration

WASHINGTON (Kyodo) Japan Airlines Corp.’s potential partnership with Delta Air Lines Inc. will not automatically open new vistas for the Japanese carrier, according to former U.S. Transportation Secretary Norman Mineta.

He made the comment as Delta tries to woo JAL into its alliance and American Airlines Inc. seeks to keep it from defecting ahead of the Japan-U.S. open skies agreement taking effect next year.

“Open skies does not mean that antitrust immunity is automatic,” Mineta said in his office in Washington. “There is a whole bunch of criteria that you have to meet.”

Mineta, an adviser to American Airlines, was referring to the question of whether U.S. authorities will waive antitrust rules and provide unlimited opportunities for joint marketing arrangements, including determining prices and selling tickets together.

If JAL and Delta forge a partnership affiliation, their combined share of flights on Japan-U.S. routes will account for 62 percent of the total and must clear antitrust hurdles.

Mineta criticized Japanese officials for not understanding what open skies are, thus warning against Tokyo’s apparent preference for Delta as JAL’s partner. JAL is restructuring under government supervision and therefore could be easily influenced by the government’s wishes.

“The bureaucrats want to be aligned with the No. 1 carrier in the world. But what does it bring you? Does it bring you that much? I don’t think so. Not if (it) doesn’t give you antitrust immunity,” he said.

Mineta, who served as transportation secretary from 2001 to 2006 and is currently vice chairman of major U.S. public relations firm Hill & Knowlton Inc., said he is convinced American Airlines is the best choice as JAL’s partner.

“Except for Japanese politics, American Airlines would be the winner,” he said. “In the long run, I would think that American Airlines should be the choice.”

Japan and the United States struck a landmark open skies deal Friday that is sure to intensify the fierce competition between Delta and American Airlines.

Delta has offered JAL a $1.02 billion financial package with global SkyTeam alliance members, including a $500 million investment, to wrest the Japanese airline from the rival oneworld alliance with American Airlines, a unit of AMR Corp.

American Airlines has also said it is prepared to invest up to $1.1 billion in JAL, together with its oneworld partners and private equity firm TPG Inc., to prevent JAL’s defection.

Following Friday’s deal, JAL President Haruka Nishimatsu said in a statement the airline “will aim at providing better services for customers through managing air routes efficiently and establishing a strong network.”

The Japan-U.S. open skies pact will give carriers more freedom in opening routes and selecting the number of passenger and cargo flights between them.

U.S. and Japanese carriers will each be granted landing and departure slots for up to four round-trip flights daily late at night and early in the morning between U.S. cities and Tokyo’s Haneda airport, which is due to open a new runway next October.