The United States and Japan ended one of their largest outstanding trade disputes Friday by agreeing to remove most restrictions on air traffic between the two countries.
The agreement will add service between more cities in both countries, remove restrictions on five carriers - United, Northwest, Fedex, Japan Air Lines, and All Nippon Airways - and loosen restrictions on other carriers as well as allow new American airlines into the market.
It will also allow allied airlines to jointly offer the same flights, known in the industry as “code sharing,” whether the carriers are American, Japanese or from third countries. The agreement also confirms the rights of cargo carriers to transport freight through Japan to further destinations.
Absent from the agreement, however, is any plan for increasing the number of landing slots for these new flights at Narita airport near Tokyo.
The dispute that ended on Friday goes back to the last days of the American occupation of Japan when the two countries reached an air agreement. Japan has complained that, because the country was so weak at the time, the agreement was negotiated unfairly. The U.S., for its part, had insisted that Japan remove barriers to air service passing through the country en route to other Asian destinations before any broader agreement could be reached.
Clinton administration officials described the agreement, which has been under negotiation for 12 months, in expansive terms. Daniel Tarullo, the deputy assistant to the president for international economic policy, said this was “an agreement that will change the face of transPacific air travel.”
The result, he said, would be “a dramatic increase in air services, both passenger and cargo, across the Pacific,” and job growth in the aviation industry and in other industries in cities around the United States that would gain service to Japan for the first time. The United States and Japan are the world’s first-largest and second-largest economies, administration officials pointed out.
But some airlines were not so sure. At Northwest, which enjoys limited rights now and would gain more under the agreement, Michael Levine, executive vice president for marketing, said that in the current economic environment, with a soft economy in Japan and a crisis in much of Asia, the effect of the agreement would be “relatively little.”
“Because there are no net new slots, there is not going to be a lot of net new service,” he said, referring to landing spots at Narita Airport where the international Japanese aviation market is highly concentrated.
Administration officials countered that Fedex has unused slots at Narita, and said the airline could sell them to other American carriers.
Morever, they said, the Japanese agreed to allow these slots to change hands among American companies as a commercial transaction. Northwest complained, however, that most of these landing slots occur very early in the morning, which would require after-midnight departures from American cities, and are too early to appeal to travelers originating in Japan.