Japan airlines ordered to revise merger plans
Advertiser News Services
TOKYO — Japanese regulators told two major Japanese airlines to revise their merger plan to guarantee healthy competition and pricing.
Associated Press
Japan's Fair Trade Commission told Japan Airlines Co. and Japan Air System Co. yesterday to make the changes in their plan to merge operations to form the world's sixth-biggest carrier.
Passengers of Japan Airlines and Japan Air System check in at self-service computer terminals at Haneda Airport.
The commission's action does not mean the planned merger has been rejected. It is possible it can go forward with revisions.
The airlines, which announced the deal in November, plan to set up a holding company, Japan Airlines System Corp., in October.
Japan Airlines and Japan Air System said they will carefully study the issues raised by the Fair Trade Commission and continue talks with the commission.
"We have been trying to explain the necessity of establishing a stronger business base to withstand intensifying global competition," the two companies said in a joint statement.
Japan Airlines and Japan Air System defend their planned merger as challenging the domination of All Nippon Airways in the domestic market, a change it says will lead to cheaper fares and better service. ANA now controls about half of the domestic market, while JAL and JAS each hold about 25 percent.
JAL has also argued that the merger with JAS will give them a better chance against foreign companies in the international market.
But the combined JAL-JAS share of international flights among Japanese carriers will total 80 percent, compared with 20 percent for ANA. The combined share of JAL and JAS for flights arriving and leaving Haneda Airport, Tokyo's main airport for domestic flights, will total 60 percent.
The Transport Ministry said Japanese overseas travel numbers fell in 2001 for the first time since 1993 as the country's third recession in a decade and safety worries following Sept. 11 dented travel demand. The number of people traveling to and from Japan last year fell 9.1 percent to 17.48 million, the ministry said.
Travel demand has started to recover after airlines discounted fares, sometimes as much as 70 percent compared with published economy fares, to help fill seats.
