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  • JAL to Stay with AA/Oneworld

    JAL To Stay With American And Oneworld


    Feb 9, 2010


    Japan Airlines has decided to maintain its alliance with American and Oneworld instead of switching to Delta and SkyTeam, and said JAL and American soon will apply to U.S. and Japanese authorities for antitrust immunity on transpacific routes.

    JAL and American, under a plan previously disclosed during their negotiations, would use the immunity for a joint business venture for their U.S.-Japan service.

    JAL Group COO and President Masaru Onishi said JAL officials are “excited at the prospects” of the joint venture, and “firmly believe that the advantages of this development with American Airlines can strongly support JAL at a time when we are striving towards the revival of our business.”

    The decision ends an intense, high-stakes and sometimes public battle, and is a welcome relief not only for American, but also for its oneworld alliance. JAL said it also plans to “fortify its relationships” with other oneworld members.

    American said the airlines “will now focus on building a joint venture that can offer JAL significant revenue growth beyond the stability that oneworld offers today.”

    American, as part of its early January offer and argument to keep JAL as an alliance partner, told JAL it can get an additional $100 million in annual revenue from an immunized joint venture – and it guaranteed that $100 million in new revenue to JAL for the first three years of the venture.

    Also as part of that offer, Oneworld member British Airways proposed a series of “enhancements to its business relationships” with JAL that it said would result in approximately $200 million in new revenue for JAL over three years. That included a joint business venture between the two carriers that would begin in April 2011 and include new service between London Heathrow and Tokyo Haneda.

    Oneworld member Qantas, parent of Jetstar, offered to “share expertise” with JAL on its two-brand and low-cost carrier business strategy. And American said it would provide JAL more support and cooperation on fleet planning, network analysis, financial forecasting, revenue management and maintenance operations.

    Delta responded to JAL’s decision by emphasizing its big presence in the U.S.-Asia market, even without JAL. Delta said it remains “well positioned as the number one carrier between the U.S. and Asia” and noted its nonstop service between 10 U.S. cities and Tokyo. Delta also operates a hub at Narita, thanks to its acquisition of Northwest.

    Photo credit: Japan Airlines

    http://www.aviationweek.com/aw/gener...d&channel=comm


    Good to hear JAL is staying with Oneworld and news coming from Oneworld.
    what ever happens......happens

  • #2
    Some say that this decision only makes sense in the short run to reduce the risk of switching alliances. In the long run, JAL would be better-off with Delta. Nothing substantial will change for JAL, which is bankrupt.
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    • #3
      Meh, it's JAL's decision. Don't like it, but what can do when an airline is still stuck in the past and not willing to adapt to changes. Then again, if their overall economy is any indication, that's seemingly what the Japanese are best at.

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      • #4
        Well - this will sure be interesting to watch An ailing airline staying with an ailing alliance. Sticking with OneWorld sure was a conservative and cautious decision on behalf of JAL - but in my opinion the time for being conservative and cautious is long gone for JAL. Switiching to SkyTeam would have brought them into the fold with a powerful array of Asian airlines (Koreanair, China Southern, Vietnam Airlines) on their own continent and a strong partner across the Pacific.
        As for SkyTeam - I think they were willing to take over JAL and help turn them around. But they won't be too sad now. JAL may still go completely belly-up and there's no real threat to SkyTeam from JAL staying in OneWorld. I don't see OneWorld threatening SkyTeam's number 2 spot in Asia any time soon.

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        • #5
          Originally posted by Peter Kesternich View Post
          Well - this will sure be interesting to watch An ailing airline staying with an ailing alliance. Sticking with OneWorld sure was a conservative and cautious decision on behalf of JAL - but in my opinion the time for being conservative and cautious is long gone for JAL.
          In part, is not now the best time to be cautious? Making bold and unfounded moves would cripple an already ailing airline. Keep in mind that JAL has taken massive subsidies from the Japanese people (in the form of 'bail-out money') as well as had to market themselves to American clientelle. Nothing but conservative moves (in the short run) would garner support for a potential bid. This is not the olden days where fianancing was easier to secure. With such tightly gaurded credit, the world's financiers are attracted to safer assets (and value moreso than potential) at the moment.

          Originally posted by Peter Kesternich View Post
          Switiching to SkyTeam would have brought them into the fold with a powerful array of Asian airlines (Koreanair, China Southern, Vietnam Airlines) on their own continent and a strong partner across the Pacific.
          By that same token, it would have also greatly allowed said carriers to encroach onto an already weak carrier's domain. I would almost guarantee that JAL joined SkyTeam, the partnerships that it would have formed would have been unilaterally in the favor of other carriers. With a weak JAL, other airlines (namely Koreanair, and China Southern, and most powerfully Delta) would capatilize on the traffic to/from Japan with JAL being relegated to a rather domestic network. If you find fault in my logic, look at some of the plans announced when JAL was courting DL's investments. DL et al was so very interested for it would allow them to run Japanese international flights, and JAL as domestic and reigonal flights (that surely would not interfere with key partner routes).

          As for a 'strong partner across the pacific,' I apologize for this comment, but is AA chopped liver? The airline is one of the strongest in the Western hemispehere, with connections throught the Americas that makes it an unparalleled partner. Why would JAL not want to partner with an airline that has their markets well convered and allows JAL to fly premium and long-haul routes that do not interfere with most international expansion plans (i.e. where the untapped markets are, i.e. where the real money is)?

          Originally posted by Peter Kesternich View Post
          As for SkyTeam - I think they were willing to take over JAL and help turn them around. But they won't be too sad now. JAL may still go completely belly-up and there's no real threat to SkyTeam from JAL staying in OneWorld. I don't see OneWorld threatening SkyTeam's number 2 spot in Asia any time soon.
          Keep in mind, that SkyTeam is not completely immune from troubles themselves. It's interesting to see DL trying to extend a hand to JAL and yet does not still have all of it's own issues fixed. Remember, DL is still in the process of merging two identities, two crews, and two fleets. I see trouble ahead if unions do not meet well, and if demands are not met. Also, the infusion of monies (from the Japanese Governemnt and from AA) is to help the airline stave off 'going belly-up'. With the aide of other airlines in the OneWorld system, I am sure that JAL will be in great hands.
          Whatever is necessary, is never unwise.

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          • #6
            That's all well and true, but SkyTeam is a far more integrated alliance than OneWorld (look, for example, at the trans-Atlantic joint ventures) and OneWorld has a bad history of treating partners that are in financial trouble. Remember how they left their founding member Canadian Airlines to the Air Canada wolves?

            As for encroaching on a weak carrier's domain, it's precisely the aim of an alliance to prevent encroachment. Within the alliance, the partners should work together and share the revenue, rather than trying to steal each other's customers. SkyTeam would be a much safer place for JAL then OneWorld, because it would offer the protection of a lot more airlines in te Asian region. And bear in mind that there is always Star Alliance, who have All Nippon, Asiana,Air China, Thai and Singapore Airlines. Try pitting OneWorld in Asia against THAT powerhouse. Chances are they won't be as successfull as SkyTeam would have been. In the long run, I think not switching alliances will be a bad move for JAL.

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            • #7
              Originally posted by Eric Diffoot View Post
              JAL To Stay With American And Oneworld

              Oneworld member Qantas, parent of Jetstar, offered to “share expertise” with JAL on its two-brand and low-cost carrier business strategy. And American said it would provide JAL more support and cooperation on fleet planning, network analysis, financial forecasting, revenue management and maintenance operations.
              More support from AA on fleet planning, network analysis, financial forecasting & revenue management hey. Geez what a bonus that will be! Bit like two drunks sitting around having a wine session and sharing strategies on how to give up alcohol. The only possible outcome from listening to AA's people is more flights and less profits, or more accurately greater losses. Certainly more cooperation with OW partners is essential but they need to be a bit selective about who they listen to.

              Their session with JQ/QF about low cost operations makes more sense.

              Originally posted by Eric Diffoot View Post
              JAL To Stay With American And Oneworld

              Delta responded to JAL’s decision by emphasizing its big presence in the U.S.-Asia market, even without JAL. Delta said it remains “well positioned as the number one carrier between the U.S. and Asia” and noted its nonstop service between 10 U.S. cities and Tokyo. Delta also operates a hub at Narita, thanks to its acquisition of Northwest.
              Translates to "We've already got a crapload of flights to NRT losing a crapload of money and by golly we'll continue to put on a crapload of flights and lose even more money. You try stopping us!"


              Originally posted by Eric Diffoot View Post
              JAL To Stay With American And Oneworld

              Good to hear JAL is staying with Oneworld and news coming from Oneworld.
              Well good news for me at least as I have a FF Reward flight booked from NRT to MOW in July.

              Whether it turns out to be good news for JL depends on which strategies they adopt from here.

              OW really must take this as a big wake up call to work together. eg In AY JL has a potentially excellent partner for European traffic. AY has a good product, reasonable Asian network and a great hub airport to xfer Asian-European traffic, infinitely better than LHR. And it is much closer to NRT. But AY was completely silent during the whole saga and has close to zero cooperation and code share with JL! Simply extraordinary. Both airlines should have teams of people working together to optimise route and marketing strategies.

              Instead JL sits around pondering which US partner to get into bed with it - as if it really matters. Japan - US market is already saturated by a plethora of basket case airlines who will squeeze each other to death, or at least they would if their respective governments allowed them to die. No one is going to make any $ or Yen flying US - Japan routes anytime soon.

              IMO the best profit opportunities for JL lie within Asia (because this market is still growing) and also by optimising their relationships with OW partners beyond Asia. But they've apparently still got their eyes shut and so it seems have the other OW airlines.

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              • #8
                According to AA's employee site we have already applied with DOT for Los Angeles / New York to Haneda beginnin next fall.

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