Amidst all the heat generated from the trade friction between the US and Japan on aviation matters, Federal Express stands out as the clear winner at home and abroad. In Washington, the express freight company's political sway has influenced the highest reaches of government. In Asia, the Japan dispute has resulted in the development of a potentially more lucrative hub in Taipei.
At presstime Japan and the US, negotiating in Tokyo, were still far apart. But political pressure from Washington, and Japanese transport minister Shizuka Kamei's need for a political win as he nears the end of his tenure, made a compromise seem likely.
A first round of negotiations in Washington failed, then Kamei proposed a middle ground to avoid a 14 July negotiating deadline and possible sanctions. The dispute could be settled by granting JAL co-terminal rights between San Francisco and Los Angeles, giving Nippon Cargo US west coast access from Kansai, and agreeing to cargo rights beyond the US to Mexico and Canada.
In June, US transportation secretary Federico Peña had threatened sanctions on sixth freedom cargo services to the US operated by Japan Air Lines and Nippon Cargo when Japan refused to give FedEx fifth freedom rights between Japan and its new hub in Subic Bay, Philippines. Japan's response was to threaten equivalent sanctions on FedEx and Northwest Airlines - the other US cargo carrier to Japan.
FedEx chairman Fred Smith was not sanguine about the potential for getting the Japan-Subic Bay operation under way in time to take advantage of seasonal business in the region. In the second quarter, he told Congress, the stalemate cost the company $10 million. Its Japanese problem has prompted FedEx to revive plans for a second Asian hub at Taiwan's Chiang Kai Shek airport. Although Subic Bay operations have already been launched, Taipei could become the larger Asian hub in time.
FedEx opened its Subic Bay centre in May when it transferred flights from Manila. But the row with Japan delayed the 'official' opening, leaving FedEx to operate via Taiwan in the interim. The uncertainty over its Japan rights and Taiwan's receptive attitude to FedEx's presence means the carrier is now pressing ahead with plans for a Taipei hub that FedEx predicts will be open in two to three years.
Taipei was always near the top of the list of hub candidates, but when FedEx first explored the possibility six years ago, customs and transshipment restrictions convinced it to look elsewhere. Now, Taiwan's vision is to become a regional transport centre and it seems prepared to relax further some restrictions. It is actively encouraging FedEx to create a transshipment centre and has now given preliminary approval.
Taiwan offers several advantages over Subic Bay. Infrastructure at CKS airport is already advanced with room for growth, and Taiwan may offer FedEx more investment advantages than Subic Bay in the form of tax breaks. Initially FedEx plans to invest $18 million in facilities, but says it will need a facility big enough to dock 10 aircraft in five years.
Taiwan's biggest attractions may be geographic and aeropolitical. It is closer to the US than Subic, so nonstop flights can operate without penalties. Due to its liberal attitudes on fifth freedom traffic, Taiwan is not simply an intermediate stop - more than FedEx can say for Japan.
Source: Airline Business
