Japan Airlines chooses American over Delta
Stays with Oneworld alliance
Last Updated: Tuesday, February 9, 2010 | 5:30 AM ET
The Associated Press
A Japan Airlines employee works at a counter at Narita International Airport east of Tokyo. (Itsuo Inouye/Associated Press)Japan Airlines, wooed for months by Delta Air Lines with promises of cash and a broad global network, has spurned the world's biggest carrier and opted to keep its alliance with American Airlines.
The troubled Japanese carrier said in a statement Tuesday it will strengthen its partnership with American, and the two airlines will jointly ask the U.S. and Japanese governments for antitrust immunity on transpacific routes.
The decision brings to an end a fierce tug-of-war over Japan's ailing flagship carrier, which is restructuring under bankruptcy court protection but offers access to lucrative Asian routes.
In an aggressive courtship, Delta and its partners offered JAL $1 billion US to leave the Oneworld airline alliance. American and its partners said they would give JAL as much as $1.4 billion US to stay. There was no mention in JAL's statement Tuesday of money being part of the deal.
Delta in a statement didn't directly address JAL's choice of American, instead asserting it remains a big player in Asia.
"With recently announced plans to invest $1 billion in our product, Delta remains committed to providing a leading option for travel across the Pacific," the airline said.
American said it believes JAL made the right choice. It reiterated that American and its Oneworld partners plan to deliver to JAL roughly $2 billion in ongoing and incremental revenue over three years.
"American and JAL will now focus on building a joint venture that can offer JAL significant revenue growth beyond the stability that Oneworld offers today," American said.
Its victory seemed improbable just a few weeks ago when Japanese officials, convinced of the long-term revenue benefits, were pushing JAL toward Delta and its SkyTeam partners. But new JAL chairman Kazuo Inamori, who took over last month, insisted that management would re-evaluate both proposals from scratch.
Tug-of-war over JAL
JAL's loyalties swung back to American as executives decided an alliance switch would do more harm than good during a restructuring that is expected to take three years.
"The biggest reason for our decision to strengthen our alliance with American is to avoid inconvenience to our customers as much as we can," Daiji Nagai, senior vice-president of corporate planning, told reporters.
Also, antitrust immunity — the key to a closer revenue-sharing relationship between U.S. and Asian carriers — would likely have been difficult for JAL to achieve with Delta because of competition concerns.
American and Delta are vying to keep pace with the Star alliance, which includes United Airlines, Air Canada, Continental Airlines and JAL rival All Nippon Airways, and currently claims 31 per cent of the U.S.-Japan market.
