Things in the Sky

The Japanese government has said that  both ANA and JAL need to enter immunized agreements with their partners in the United States. So, not surprisingly, ANA, Continental, and United have submitted their application for anti-trust immunity to the Department of Transportation. The three carriers said in a joint news release that immunity would allow them “to create a more efficient and comprehensive trans-Pacific network, generating substantial service and pricing benefits for consumers.”

In the DOT application, the airlines said the deal will “expand consumer choice and enhance competition in the global marketplace” because it will “improve Joint Applicants’ ability – and the ability of the Star Alliance – to compete effectively with the SkyTeam and oneworld alliances.” They also said that the deal “will not substantially lessen” competition on service between the United States an Asia.

Interestingly, the airlines “evaluated the feasibility of including Air Canada in the Pacific JV, but decided that the additional complexities involved, including restrictions under the Canada-Japan bilateral agreement, would preclude implementation of the JV.”

United already has immunized relationships with carriers in the Pacifc region – Air New Zealand and Seoul-based Asiana.

Assuming this deal goes through, Star is in great shape when it comes to the Asian market – so the big question is what happens to the other two alliances. Will JAL stay with oneworld or hop over to SkyTeam? That question is a huge issue for American and Delta. Personally, I think that American/oneworld has a lot to lose here, while Delta/SkyTeam would be successful either way.

American’s share (as measured by nonstop seats) in the United States-Asia market is a measly 4.5% and and is 12.5% for the mainland U.S.-Japan Market (JAL has 11.5% and 13.4%, respectively). Meanwhile, Delta’s market share in those markets is 15.0% and 30.9%, respectively. The Narita hub acquired from Northwest helps them as well. Basically, American really needs JAL to help stay competitive, though it would still have an Asian partner in Cathay Pacific. (Those numbers are from the Star filing.)

The application is 203 pages long. I know what I’ll be reading this weekend.

Anyway, I won’t be posting tomorrow as I’ll be taking Christmas off. I will be writing my usual weekend posts, though. Next week, make sure to come visit and read my review of Up in the Air and why I no longer like Al Roker!