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

By Tim Kelly and Kentaro Sugiyama

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

The Japanese government awarded All Nippon 11 of 16 slots up for grabs at Haneda next year, which can be worth around $20 million 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 the United States, have yet to be decided. Airlines normally retain international slots as long as they stay in business.

The new slots became available after the opening of a new runway. With no more new runways or airports planned for Japan's capital, the ruling will likely be the last major slot distribution in Tokyo for years.

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

Haneda handles mostly domestic traffic while Narita International airport receives most international traffic.

The two carriers have been embroiled in a politically-charged contest for the lucrative slots, the latest in a decades long fight between two of the world's major airlines.

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

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

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

Oneworld members including British Airways and American Airlines had earlier asked Japan to consider its grouping when deciding how to share the landing rights.

In an unusually strong statement in a country where corporations rarely publicly criticise officialdom, JAL said "we sincerely regret that we cannot accept this. JAL will proceed to formally seek a rational explanation and a correction of the content of this allocation."

Japan Civil Aviation Bureau said the two-to-one handout in ANA's favour, including routes to Vietnam, Germany, Indonesia and the Philippines, was meant to level the competitive playing field between the two Japanese carriers after JAL's bailout in 2010.

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


ANA lobbied hard for the slots arguing that JAL's bailout and revival wiped out most of its debt and left it with tax credits that gave it the financial clout to beat ANA in any price war.

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

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

JAL, once Asia's biggest carrier, argued that competition issues should be settled through other means than slot allocations. The airline's strong reaction to the allotment may indicate it is ready to fight for the four remaining slots.

In the quarter to June 30, JAL made an operating profit of 22 billion yen ($224.20 million), while ANA posted a 5.6 billion yen operating loss.