High expectations for a treaty between the US and Japan, that might at least have paved the way towards full open skies, collapsed with a resounding thud in Washington DC during the September round of bilateral negotiations. And there has followed much finger wagging at Northwest Airlines, which is accused of being chief villain in a plot to scupper attempts to achieve any sort of progress in this, the most difficult of all aviation bilaterals.
As the negotiations pingponged between the US and Japan through the spring and summer, a frisson of excitement built up that was based on the idea of an interim 'breakthrough' agreement being achievable as early as September. 'For the first time in living memory, there is a real opportunity to do a big deal to liberate flying between the US and Japan and which will clear up rights to go deeper into Asia from Japan,' prophesied United Airlines' chairman and chief executive officer, Gerald Greenwald.
Greenwald's optimism may have been shared by Rodney Slater who, since being appointed secretary at the US Department of Transportation earlier this year, has put his signature to so many new open skies agreements that the process was beginning to appear routine. A Japanese bilateral, however, has never been a routine matter.
A sign that not all was progressing so smoothly came in August, as US President Bill Clinton prepared to retreat for a three-week holiday. Before leaving, Clinton took the unusual step of granting a private audience to someone with a keen interest in the US-Japan negotiations - Federal Express chairman Fred Smith. While FedEx has longstanding beyond rights from Japan, Smith has grown increasingly frustrated by the way those rights have been blocked by the Japanese, especially on the China routes. Details of the meeting have not been made public, but it is believed that Smith was characteristically frank. He insists that Japan must honour FedEx's fifth freedom freighter rights. He does not want a half-baked passenger treaty which might persuade Japan that the US is prepared to forget about full open skies and turn a blind eye to cargo rights in return for that agreement.
With Smith's persuasive argument in his ear, Clinton seems to have prodded the DOT officials to look more closely at the interim agreement. And sources say that the talks that followed, far from rubber stamping a bilateral framework by the 30 September deadline that the US negotiators had in mind, came unstuck primarily over the issue of slots at Tokyo's Narita airport.
The Japanese were not actually offering any more access to this constrained airport, which made talk of new routes meaningless. 'It is like flying the plane without the landing gear,' says a senior spokesman at Northwest. 'Smith alerted the administration to the pitfalls of rushing into this agreement on a self-imposed US deadline and did US industry a great service.'
On closer examination, says Northwest, it became clear that the US negotiators had over-promised the idea that US carriers stood to make reasonable gains from a phased-in treaty. But, without new and useable slots at Narita, those were empty promises.
Some US carriers have remained vocal in their support of a compromise deal, however. Both American, which is believed to be arranging a codeshare with Japan Airlines, and Delta are particularly keen to see an agreement pushed through and are publicly chiding Northwest for digging in its heels. 'Northwest is doing everything possible to thwart US Government efforts to bring increased air service between the US and Japan to further their own self interests,' says Delta's senior vice president government affairs, Scott Yohe. 'Northwest fears new competition.'
Most interesting of all has been the about-face of United, which last year was holding out for open skies or nothing, but is now in favour of a more 'pragmatic' deal. United, which is believed to be courting All Nippon Airways into a codeshare, says it is time to accept that Japan is not ready for full open skies and to adopt instead a 'result-orientated' strategy.
Getting in the way of those results is Northwest, says Access US Japan, a US aviation lobbying organisation. Its chairman, Gerald Baliles, accuses Northwest of fearing competition, not from Japan but from its fellow US airlines. Northwest has enjoyed a 'favoured position' since 1952 when it gained rights to and beyond Japan. 'It has been spared the rigours of competition and has grown comfortable,' says Baliles.
Northwest admits that it wants to protect its 50-year investment in the Japanese market, but denies it is holding out for something unattainable to prevent other US carriers from getting a foot in the door. 'We believe the US has the leverage now to get full open skies and we support open skies,' says the spokesman. 'But we don't believe the US should sell out.' He cites the desire by Japan to gain so-called incumbent status for ANA, the multi-billion dollar trade deficit between the countries, and the weak yen as reasons for the US to stand firm.
Northwest is now joined by seven US Senate full committee chairmen who have written to the president urging him to see open skies as part of a larger US-Japan trade issue and not to settle for a compromise. 'Given the long history of Japan's troubling behaviour in a host of economic sectors that have limited access to that country's markets, and the large number of trade disputes we have with Tokyo, abandoning open skies at this time would send the Japanese precisely the wrong signal,' says Bill Roth, chairman of the Senate finance committee.
Newly alerted, the US negotiators were due to meet their Japanese counterparts again in Washington in late October. This time, the message appears to be that pragmatism can only go so far.
Source: Airline Business
