Japan Airlines

Japan-US set to end air row

PUBLISHED : Friday, 07 July, 1995, 12:00am
UPDATED : Friday, 07 July, 1995, 12:00am

JAPAN and the United States will probably settle their bilateral aviation dispute with a trade-off that gives both sides some benefits, a Japanese Transport Ministry official says.


'The most likely scenario would be Washington gains route extensions for Federal Express Corp and something else, and Japan gets an expansion of its aviation rights which we think would be in proportion to Washington's gain,' he said.


The two governments started vice-ministerial talks on the aviation dispute on Wednesday.


Trouble started on April 11 when Japan rejected a Federal Express application for beyond rights in Japan, which would allow the air cargo company to fly via Japan's airports to its new Asian hub in Subic Bay, The Philippines.


The US company filed another application on May 19 but had not yet received an answer from the Transport Ministry.


Joseph McCarty, Federal Express senior vice-president for Asia-Pacific division, said on Wednesday the dispute had delayed the opening of the Subic Bay hub.


'We are the only US carrier which has reduced capacity in Japan over the past six years and are now operating at only 71 per cent of our 1989 capacity,' he said, suggesting it was unfair to accuse Federal Express of taking advantage of the Japanese market.


The two sides continue to squabble as the US-imposed July 14 deadline approaches.


After that date, the US Transportation Department must decide whether to impose sanctions on two Japanese carriers - Japan Airlines (JAL) and Nippon Cargo Airlines.


The sanctions would bar the two airlines from carrying cargo on-loaded in five Asian destinations - Hong Kong, Taiwan, Singapore, Indonesia and Thailand - to US cities via Japan.


Geoffrey Tudor, a spokesman for Japan Airlines, said: 'Allowing Federal Express to use Japanese airports under an aviation agreement that is decades old could lead to over-capacity in Asian cargo markets.' Mr Tudor was referring to the 1952 Air Transport Services Agreement, signed when Japan's airline companies were just getting off the ground.


He suggested the US still enjoyed advantages in Asian aviation markets under an 'unequal' treaty, and was understandably reluctant to give them up.


That agreement, he said, gave US carriers virtually unchecked access to the region at a time when US citizens and business people dominated travel to Asia.


Times have changed and now most Asian air travellers were Asians spending their own currencies for air tickets, Mr Tudor said.


'Although the focus of bilateral talks this week is on cargo, the heart of the matter is the revision of this 43-year-old agreement which is fundamentally weighted in favour of the United States.


'Our position has always been that this agreement is out of date, unfair and should be corrected.' Meanwhile, Japan Airlines president Akira Kondo said JAL backed the Japanese Government's stance in aviation talks with the United States and it would submit its opinion to Washington if no progress was made in the talks by Friday.


'We support the Japanese Government's position in its aviation talks with the US and we want the dispute to be settled peacefully,' Mr Kondo said.


'We will submit our opinion to the US Government if no progress is made by July 7.' In June, the US Department of Transportation proposed sanctions against JAL and Nippon Cargo Airlines.


It said individuals and companies concerned could submit opinions on the proposed sanctions by July 7.


The department said it would then make the final decision on whether to impose sanctions after July 14.


JAL said the main cargo transporters in Asia should be Asian carriers and not US.


 

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