U.S., Japan ready to sign aviation pact

Airline and administration sources expect a deal will be reached next week

Reuters

WASHINGTON - U.S. and Japanese negotiators next week are expected to agree on a pact to increase the number of flights and airlines serving the two countries, sources from all sides of the negotiations say.

After a year of talks, both supporters and foes of a further opening of the $10 billion market see compromise emerging on key issues at a meeting in Washington starting Tuesday.

(Hawaii has much at stake in the negotiations since airlines from both countries have expressed interest in expanding their Hawaii-Japan service.)

"The big roadblocks seem to be coming down," said Frank Jenista, spokesman for Assistant Secretary of State Alan Larson, who has been leading the U.S. side in the discussions. Jenista said a November meeting in San Francisco had marked a turning point and was followed by productive talks in Tokyo last month.

"There's still some negotiating ahead for both sides, but we go into (next week's talks) reasonably optimistic that we are within reach of an accord," Jenista said.

According to airline industry sources, the agreement will allow about 90 extra flights a week by airlines that currently have limited rights, such as AMR Corp.'s American Airlines, Delta Air Lines Inc. and Continental Airlines Inc.

The three carriers that had unlimited rights under the original 1952 treaty - UAL Corp.'s United Airlines, Northwest Airlines Corp. and cargo carrier Federal Express Corp. - would again enjoy unlimited flights from any city.

In return, the industry sources said, All Nippon Airways Co. would join Japan Airlines Co. as a second carrier enjoying unlimited access to the United States.

The issue of new slots at Tokyo's crowded Narita Airport to make any agreement on new flights credible has reportedly been solved by Japan insisting FedEx make available its unused rights. Increased joint marketing of flights by airlines through code-sharing will also be part of the pact, said one airline official who asked not to be identified.

Hopes have risen before in these long-running negotiations, but all interested parties agree a deal is close.

Senate Foreign Relations Committee Chairman Jesse Helms even warned the Clinton administration this week to hold off any agreement until he holds a Feb. 12 hearing on the issue. "I urge that the administration not conclude an agreement prior to this hearing," said the North Carolina Republican, who prefers an unrestricted "open skies" pact.

Northwest Airlines, the biggest U.S. carrier on the Japan route, also advocated open skies and continues to oppose the partial market opening being discussed.

Northwest Vice President Elliott Seiden said the current proposal favors Japan and the United States was flunking its first test since the Asian economic crisis started to impose the discipline it preached."This is the first opportunity to demonstrate through action as well as word that what's needed in Asia is a healthy dose of deregulation," he said.

But United Airlines Chairman Gerald Greenwald said the two countries were on the brink of a historic deal. "The proposed agreement will provide for expanded access to Japan and Asia from every city in the United States, offering unprecedented opportunities for expanded tourism, employment and economic growth in the U.S. and the world," Greenwald said.

Industry analysts say the pact will be particularly important for United, whose Chicago hub was limited to just six Japan flights a week by a 1985 amendment to the treaty.