Japan's ANA wins Haneda fight, Star Alliance gains advantage

Reuters

By Tim Kelly and Kentaro Sugiyama

TOKYO, Oct 2 (Reuters) - Japan's ANA Holdings wonthe battle of Haneda on Wednesday, beating rival Japan Airlines to scoop up most of the new international landing slotsat the world's fourth busiest airport in Tokyo and a victory forits Star Alliance group.

The Japanese government awarded All Nippon 11 of 16 slots upfor grabs at Haneda next year, which can be worth around $20million a year each in operating profit, while JAL got five.Reuters, citing sources, reported the allocation a day earlier.

A further four slots which are for destinations to theUnited States, have yet to be decided. Airlines normally retaininternational slots as long as they stay in business.

The new slots became available after the opening of a newrunway. With no more new runways or airports planned for Japan'scapital, the ruling will likely be the last major slotdistribution in Tokyo for years.

JAL, rescued from bankruptcy three years ago thanks to agovernment bailout, said it would protest the decision.

Haneda handles mostly domestic traffic while NaritaInternational airport receives most international traffic.

The two carriers have been embroiled in apolitically-charged contest for the lucrative slots, the latestin a decades long fight between two of the world's majorairlines.

Japan's largest carrier ANA lobbied hard for a big share ofthe landing rights, arguing that it had been put at acompetitive disadvantage by JAL's $3.5 billion taxpayer fundedbailout in 2010.

Moreover, their rivalry this time spilled over into theinternational arena, dragging in their foreign partners at theStar Alliance and Oneworld groups.

ANA's new landing rights will boost Star Alliance's share ofdaytime international flights to 52 percent, while lowering theshare of Oneworld, which includes JAL, to a quarter from almosta third, according to Japan Airlines.

Oneworld members including British Airways andAmerican Airlines had earlier asked Japan to consider itsgrouping when deciding how to share the landing rights.

In an unusually strong statement in a country wherecorporations rarely publicly criticise officialdom, JAL said "wesincerely regret that we cannot accept this. JAL will proceed toformally seek a rational explanation and a correction of thecontent of this allocation."

Japan Civil Aviation Bureau said the two-to-one handout inANA's favour, including routes to Vietnam, Germany, Indonesiaand the Philippines, was meant to level the competitive playingfield between the two Japanese carriers after JAL's bailout in2010.

The revival "resulted in a very big difference in thefinancial standings of JAL and ANA," Shigenori Hiroaki, directorof the aviation industries the Civil Aviation Bureau, told anews conference in Tokyo after announcing the decision.

ANA SAYS JUST REWARD

ANA lobbied hard for the slots arguing that JAL's bailoutand revival wiped out most of its debt and left it with taxcredits that gave it the financial clout to beat ANA in anyprice war.

Prime Minister Shinzo Abe's government, which was inopposition when JAL was rescued, lent a sympathetic ear. Thelatest allotment was, industry sources earlier told Reuters,decided with heavy involvement from Abe's office.

"We welcome the decision. This will help close thecompetitive gap between ANA and Japan Airlines," ANA's CEO,Shinichiro Ito said in a statement.

JAL, once Asia's biggest carrier, argued that competitionissues should be settled through other means than slotallocations. The airline's strong reaction to the allotment mayindicate it is ready to fight for the four remaining slots.

In the quarter to June 30, JAL made an operating profit of22 billion yen ($224.20 million), while ANA posted a 5.6 billionyen operating loss.

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