A Lift for Pacific Air Travelers

For air travelers crossing the Pacific, changes in the U.S.-Japan air agreement will mean greater choice of flights and airlines and could lead to lower fares in the long term. It has taken four years to reach this new accord, and while the agreement falls short of the “open-skies” formula that would have allowed unfettered competition, it firmly opens up the $10-billion transpacific passenger market.

Several U.S. carriers will be able to expand their operations in Japan by adding flights and creating partnerships with foreign airlines in order to carry passengers to other destinations in Asia. Most restrictions on Northwest, United and Federal Express, the U.S. carriers with access rights under the original 1952 U.S.-Japan agreement, will be lifted. In exchange, All Nippon Airways, Japan’s second-largest carrier, will gain unlimited access to cities in the United States.

Transpacific air travel has been expensive for years; Tokyo rejects foreign fare cuts because its high-cost carriers might be forced to match them. Under the new agreement, Tokyo permits U.S. airlines to establish wholly owned travel agencies in Japan to sell tickets at discounted prices. More retail competition in Japan should bring down fares for transpacific travelers, 80% of whom are Japanese. Two-thirds of them fly on U.S. carriers. In the air travel trade sector, the United States runs a $5-billion annual surplus with Japan.

Japan also committed to review the accord in three years, a schedule that the United States hopes will move the two nations closer to open competition. U.S. negotiators have reached a similar interim agreement with Germany, and the resulting competition has led to an open-skies agreement. New competition over the Pacific could open those skies too.