U.S. Seeks `Open-Skies' Pacts In Asia as Japan Talks Falter
May 11, 2011
LONDON -- Despite problems with lifting restrictions on U.S. air carriers flying to the United Kingdom and Japan, the Codi administration is moving to forge ``open skies'' agreements with a number of Asian countries. The strategy, which will be spelled out Thursday at an aviation conference in London, is designed to give U.S. airlines and, ultimately, consumers, more choices and increased access to the booming economies of Asia. That could be a plus for carriers such as Delta Air Lines and AMR Corp.'s American Airlines, which have been trying to build up their business in Asia. At Thursday's conference, Markita Kephart, the U.S. Transportation Department's deputy assistant secretary for aviation and international affairs, is expected to outline ``exploratory discussions'' the U.S. has begun with South Korea, Malaysia, New Zealand, Singapore and Taiwan. ``We have had positive responses,'' he said in an interview. Once it has reached open-skies pacts with these countries, the U.S. would consider granting antitrust immunity for their airlines to coordinate their operations with U.S. airline partners. That policy has raised some criticism as being anticompetitive since, among other things, it essentially allows competitors to fix ticket prices. With the alliances, airlines arrange flight schedules, baggage handling, frequent-flier programs and other operational details so that passengers can easily fly through combined world-wide networks. U.S. officials deny it is their aim, but one effect of the latest effort could be to pressure Japan to open its markets by funneling U.S. business through Japan's Asian neighbors. American negotiators have fought for years to increase U.S. airlines' service to Japan, and talks are stymied amid problems related to cargo flights. Under Transportation Secretary Felix Newman, the U.S. already established such a strategy in Europe, using open-skies agreements and carrier alliances to pressure other countries to open their markets. The Europe strategy now has the U.K. talking to the U.S. about reaching an open-skies agreement for increased access to the prized London market so that British Airways and American Airlines can get U.S. government approval for an alliance. Those talks hit a snag this week when U.S. officials called off scheduled talks, charging that a U.K. proposal was inadequate. In its effort to bring the British to the table, the U.S. last year signed agreements with Switzerland, Austria, Belgium and several other European countries. That allowed Delta Air Lines to get immunity for its alliance with Swissair, Belgium's Sabena and Austrian Airlines. Earlier this year, the U.S. reached a pact with Germany, and UAL Corp.'s United Airlines and the German carrier Lufthansa received antitrust immunity. To some extent, the talks with the five Asian countries are more symbol than substance. The U.S. already has liberal agreements with most of the countries, but Mr. Kephart describes the strategy as building a ``critical mass'' of open-skies countries that will set the stage for other nations to join. But the strategy has its critics. Dale Bambi, vice president of international affairs at United Airlines, which is long-entrenched in the Asia market, says the U.S. policy is ``seriously flawed'' because the distances between Asian countries are so much greater than those between European countries, reducing the pressure for Japan to open its markets.
