Flying Tiger Line Officials See Unfair Competition : U.S. Carrier Objects to New Japan Cargo Firm
The entry of a new Japanese cargo airline will seriously erode the ability of American airlines to compete on the busy transpacific route, U.S. industry officials charged Tuesday.
Representatives of Flying Tiger Line, Los Angeles, complained to the International Trade Commission that the structure of the new Nippon Cargo Airlines, owned primarily by Japanese shippers and freight forwarders, will unfairly increase Japan’s dominance of the huge U.S.-East Asian cargo market.
The officials of Flying Tiger, the largest American cargo carrier flying between the United States and Japan, added that the Japanese already have imposed a complex web of restrictions on U.S. air-cargo carriers doing business in Japan.
“We are willing to do whatever is necessary to be able to compete with any other carrier, U.S. or foreign, provided the competition is fair,” said Peter Hubbard, Flying Tiger’s senior vice president-sales and service.
Hubbard and officials from other air-cargo, ocean-shipping and air-charter companies testified at the commission hearing on how the cargo-transportation industry affects trade between the United States and Japan.
Last December, U.S. Special Trade Representative William E. Brock, at the direction of President Reagan, asked the commission to investigate the trade implications of “current conditions in the transportation of cargo.” The commission’s report to the trade office is due by June 12.
Nippon Cargo sought U.S. approval last year to operate regular flights between Tokyo and San Francisco and New York. The Reagan Administration has not made a decision on the matter.
Flying Tiger, which operates 19 Boeing 747 jets, told the commission that, because Nippon Cargo is owned by major Japanese shippers and freight forwarders that control virtually all of the air cargo originating in Japan, air shipments probably will be given increasingly to Nippon Cargo.
“The ownership of Nippon Cargo Airlines by the ‘big six’ shipping companies, the major trading companies and especially the 19 air-freight forwarders suggests such strong commercial ties between those who buy air-cargo services and the new carrier as to be antithetical to competition in international aviation,” said Harvard University Prof. Richard N. Cooper, a former State Department official who testified for Flying Tiger.
Flying Tiger officials also contend that Japanese government guidelines that require Nippon Cargo to cooperate with Japan Airlines could further affect the amount of cargo available to U.S. firms.
Japan Airlines controls nearly 50% of the transpacific air-cargo market. Flying Tiger holds a 27% market share, and other U.S. carriers have 13%.
Cyril D. Murphy, vice president of international and governmental affairs for Flying Tiger, said in an interview that “10 years from now we’ll be an insignificant part of the marketplace” without greater flexibility for his company to operate in Japan.
Dan McKinnon, former chairman of the now-defunct Civil Aeronautics Board, said that, with restrictive limitations on Flying Tiger plus a wide-open competitive environment in the United States, “it would be very difficult for our cargo carrier to compete in the long run.”
