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UAL Chairman Blasts Japan Sanctions

Airlines: United's L.A.-Narita flight set to be curtailed today. Greenwald says it's ploy to approve JAL Hawaii service.

May 01, 1996|From Bloomberg Business News

UAL Corp. Chairman Gerald Greenwald told a congressional committee Tuesday that Japan's attempts to limit the flights of U.S. carriers poses a "political and economic threat" to the United States.

Japan is placing sanctions on a United Airlines flight from Los Angeles to Narita, Japan, beginning today, Greenwald said. He said the flight was "taken hostage" by the Japanese in retaliation for failure of U.S. officials to approve Japan Airlines service between Tokyo and Kona, Hawaii.

Still, Greenwald said he doesn't want U.S. officials currently meeting with Japanese officials in Washington to give in to Japanese demands.

"If the U.S. allows the JAL-Kona request to justify implementation of Japan's L.A.-Narita sanctions, Japan will have achieved another gain and the basic problem will remain unsolved and exacerbated," Greenwald told the House panel.

The chairman of UAL, the holding company for United Airlines, said the most important priority for the U.S. in the current talks should be to make sure U.S. carriers retain their right to fly into Japan and then onto other countries. The rights, known as "beyond rights," have been put in jeopardy, he said, by other airlines that want United and Northwest Airlines to give up beyond rights so all airlines can have expanded access to fly just into Japan.

"The Japanese would love that swap," Greenwald said. The beyond rights are essential, he said, for airlines to tap into the fast-growing Asian market.

A new study found that the value of Japanese hubs and beyond rights would add up to about $100 billion over 20 years, said Cyrus Freidheim, vice chairman of Booz, Allen & Hamilton, the New York firm that performed the study.

Tuesday's hearing was just the latest in an ongoing battle between U.S. and Japanese carriers. United and Northwest say a 1952 agreement between the U.S. and Japan gives them unlimited rights to stop at Japanese cities and fly onto lucrative Asian destination, and they want Japan to abide by it.

At the same time, other U.S. airlines not covered by the 1952 accord, including Delta Airlines, are pushing to renegotiate the entire agreement so they can gain flying rights to Japan and other Asian cities.

A coalition of U.S. airlines not included in the 1952 agreement, as well as other American companies and civic leaders, have been pushing to expand the rights of other U.S. carriers to fly the Japan-Asia route. That would add more than $9 billion to the U.S. economy, according to the coalition, Access U.S.-Japan.

Informal talks between U.S. and Japanese officials about passenger service began Monday in Washington. Formal talks could occur as early as this summer.

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