As Japan Airlines (JAL) and the country's government continue to evaluate rival capital infusion bids from American and Delta Air Lines, American is dismissing suggestions it could establish its own presence in Japan if JAL selects Delta and abandons Oneworld for the SkyTeam Alliance.
American and venture capital firm TPG this week officially offered JAL a $1.1 billion financing package following a roughly $1 billion offer from Delta and unnamed fellow SkyTeam members last month.
Making a case for JAL remaining in Oneworld, American stresses JAL would lose $500 million in revenue during the first two years of a move to SkyTeam, and walk away from a potential gain of $700 million in revenue over 10 years if American and JAL were to receive anti-trust immunity of Transpacific routes.
During the 3 December ACI-NA international aviation issues seminar SVP of government affairs for American Airlines Will Ris was asked about the possibility of American bolstering its own operations in Tokyo with slots being made available through current open skies discussions between the US and Japan if JAL selects the Delta bid and shifts alliances.
Citing a 93% combined share of SkyTeam and Star Alliance in the US-Japan market if JAL jumps to SkyTeam, Ris explains investing in order to compete on that scale would be difficult.
American would either need to reposition existing metal in Tokyo or purchase new equipment, "which is not easy to finance or acquire", says Ris.
American CFO Tom Horton during a media briefing announcing the carrier's and TPG's offer to JAL, noted that from Delta's and SkyTeam's perspective, "they have nothing to lose by making the proposal, and plenty to gain".
He argues that DOT would not grant Delta and JAL antitrust immunity, leaving JAL at a disadvantage. "From the perspective of the SkyTeam alliance that's not a big problem because SkyTeam as you know already has a hub Incheon [South Korea], which you know is not far from Tokyoover which they flow their traffic," he says.
Noting that Delta and Korean Airlines already enjoy anti-trust immunity Horton says: "You can see why this is sort of a no-lose proposition for Delta but Japan Airlines has a great deal to lose."
Source: Air Transport Intelligence news
