5/86 NIPPON CARGO AIRLINES

Editorial, February 5, 1985, p.16 JAPAN TIMES

It is time that Washington listened to Tokyo's call for steps to rectify the gravely lopsided situation in the bilateral civil aviation service and thereby expand further the prosperous Pacific market as well as the two countries' domestic markets in a reciprocal manner.

Editorial. THE JAPAN LAWLETTER, this issue

It is time that Tokyo listened to Washington's call for steps to rectify the gravely lopsided situation in our bilateral trade and thereby expand further the prosperous Pacific market as well as the two countries' domestic markets in a reciprocal manner.

 

As one concession by the US in order to gain the entry of United Airlines into Japan the US government stated that it understood that Japan felt that the US-Japan aviation agreement was unfair to Japan. It understood the feeling, but did not admit anything about it being a fact. It agreed to initiate talks with the Japanese government from March 1986 on the problem. The Japanese government decided to concentrate its efforts on expanded flights into the US by NCA. Japan may have felt that the agreement was unfair, but the US felt that NCA, the company was unfair. NCA was after all a company whose shareholders were All Nippon Airways, Japan's second ranking airline and Japan's major shippers. As such it was an alliance of a Japanese firm offering a service and the major users of the service. To American eyes, it appeared a "typically Japanese" alliance meant to keep the foreign competitors out. Prime Minister Nakasone himself wrote a personal letter to his friend President Reagan, asking that NCA's flights to the US be increased and entry to Chicago granted. It has become evident however, in the past few months that the personal diplomacy method of Prime Minister Nakasone has been rapidly weakening. Japan wants to increase the weekly flights to NCA to the US to nine per week from the present six.

Negotiations have not been going well. The US has been seeking concessions if it is to grant Japan's wishes. Specifically it has sought that Japan ease its customs clearance and animal and plant quarantine procedures and to permit forwarding agents to ship their cargoes on charter flights. Japan was willing to concede somewhat on this point, but not as much as the US sought. Japanese firms regarded the approval of charter flights for freight forwarders as the same as permission for the entry of a new air freight airline and expressed their opposition. Negotiations broke down in March 1986 when the US decided that what Japan was offering was not equal in value to the increased NCA flights. Thus the US requested that Flying Tiger Airlines be permitted a new route from Tokyo to Western Europe via Anchorage. Japan refused.

Many Japanese air freight forwarders, particularly the larger ones, were in fact supportive of the US proposal for chartered flights. Smaller air freight forwarders and the airlines were opposed to the idea. They believed that the it would lead to greater concentration in the industry as the larger firms would be able to negotiate greater discounts. Ironically, one of the major reasons why the large Japanese air freight forwarders were supportive of the idea was so that they could compete with Federal Express, which uses its own airplanes. The Japan subsidiaries of American firms, such as Emory Air Freight and Airborn Freight Co. also liked the idea. If charters were permitted, they could charter out the planes owned by their parent companies to Japanese freight forwarders, reducing costs. US-Japan negotiations again broke down in early April as Japan continued to resist US demands and the US newly demanded that Japan expand the hours during which US air freight airlines could take off and land in order to provide better service between Japan and the US. Japan said that the Narita and Osaka airports were already totally filled and the new request was impossible. Japan then announced that it had reached a basic agreement with the US. It stated that NCA would be granted three more flights per week to the US, but this would not be granted all at once. They would be phased in over the year. In return Japan would simplify its customs clearance procedures, grant evening and night landing and takeoff authorizations for American air freight aircraft and permit 100 charter planes per year for freight forwarders provided that they were narrow-bodied craft such as the DC8s, etc. A few days later it had to backtrack however, as the US had newly insisted that Japan grant more air cargo flights by US carriers to other foreign destinations from Japan, such as Hong Kong. Earlier NCA had announced that it would be launching air freight services to Hong Kong within the year.

THE JAPAN LAWLETTER, May, 1986. By Roderick Seeman