American Airlines’ top executive has delivered his most pointed attack yet on Delta Air Lines’ bid to form a joint venture with Japan Airlines, arguing that Delta would face an uphill battle in convincing US regulators to approve the partnership.

American, the world’s second-largest carrier, is seeking a venture of its own with JAL, its partner in the Oneworld alliance and a vital link to Asian destinations. JAL, mired in a complex restructuring plan, is in talks with both US carriers to strengthen ties before the US and Japan agree to ease airport access to foreign carriers next year.

The winner would then seek immunity from US antitrust laws, freeing the two airlines to co-ordinate on schedules, fares and corporate sales pitches while sharing revenue on flights.

In comments obtained by the Financial Times, Gerard Arpey, American’s chief, told managers that Delta’s extensive presence at Narita Airport, Tokyo, would make any co-operation with JAL a difficult sell to US transport regulators.

“If JAL were to change horses, we would certainly argue that they might not be allowed to even code-share, let alone have immunity with the dominant carrier in Narita,” Mr Arpey said. “We have poured energy into this situation to make sure all of the facts are on the table, that both the JAL management team and this [restructuring] task force . . . understands the landscapes.”

Delta executives have maintained that their planned venture would help bring stability to a Japanese airline that has foundered in spite of its relationship with American and its fellow Oneworld allies, and dismissed the notion that a JAL partnership would cripple competition on trans-Pacific routes. The Atlanta-based carrier has offered to pay JAL for the costs of switching allegiances.

The battle for JAL has escalated as the US and Japan have inched closer to an Open Skies accord. Negotiators from the two countries concluded meetings in Tokyo last month with expectations that they could reach an agreement next month when talks resume in Washington.

The US has made clear that an Open Skies agreement is a prerequisite, and not a promise, that Japan’s two largest carriers would be granted antitrust immunity, said John Byerly, chief US aviation negotiator.

“The Department of Transportation can’t prejudge the decision,” he said. “What you can do is look at decisions that the DOT has made in the past, and consult experts in the field.”

Nevertheless, Japan has insisted that any Open Skies agreement that is reached would not begin until US transport officials rule on any immunity applications involving national carriers, a detail that
countries such as Germany and Canada pursued in
past negotiations, Mr Byerly said.

Copyright The Financial Times Limited 2019. All rights reserved.

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