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Mileage members fret over their points earned on JAL, credit cards

by Mariko Kato

With Japan Airlines filing for bankruptcy and undergoing court-led rehabilitation, consumers are worried about how this may affect their mileage points and points they have saved by using JAL credit cards.

Following are some questions and answers about the mileage system:

After JAL files for bankruptcy, can consumers still use mileage points?

Enterprise Turnaround Initiative Corp. of Japan, the government-backed turnaround body, says it will seek to save mileage points JAL users have accumulated, although it is under no legal obligation to do so.

What about points accrued via JAL credit cards?

Supermarket chain Aeon Co., one of the companies that tied up with JAL so card holders can use or accumulate mileage points when they shop, says the service is not likely to be affected as JAL undergoes rehabilitation.

“We are not even considering the possibility,” an Aeon spokesman said.

Other businesses that take part in the point system, including convenience store chain Lawson Inc. and the Tokyu Co. railway, have taken similar stances, according to reports.

But Makoto Murayama, a senior analyst at Nomura Securities Co., said JAL could change the service, including by altering the exchange rate between mileage points and credit card shopping points.

“It is a burden for JAL to give away free flights, so they may try to reduce that,” he said.

If JAL ties up with Delta Air Lines, as ETIC reportedly prefers, it would leave the oneworld alliance. In that case, could oneworld customers still use mileage points on JAL?

“We don’t know at this stage what would happen, and we can’t say anything while (the possibility of tying up with Delta) is still only an assumption,” said a spokeswoman for JAL.

But Murayama of Nomura Securities said customers of oneworld, which is led by American Airlines, will not be able to use mileage points for JAL flights if the carrier completes a tieup with Delta and its SkyTeam alliance, possibly around November 2011.

“That was the case when Continental Airlines left SkyTeam to join Star Alliance last year, although they had known about the move a year beforehand so they warned customers,” he said.

Meanwhile, those who have saved mileage points with JAL will likely be able to convert them to SkyTeam points should JAL tie up with Delta, according to a Delta spokeswoman.

“Even though we can’t really confirm anything at this stage, our company’s president has said in a recent interview that he wants to protect consumers’ rights and (the conversion of mileage points) will probably be OK,” she said.

This is in line with when Northwest Airlines merged with Delta in 2008 and customers were able to convert points they saved up with Northwest to SkyTeam points.

How would a Delta tieup affect flights?

If JAL leaves oneworld, its customers will lose a lot of U.S.-Japan flight choices. But if they join SkyTeam, those options would increase due to Delta’s acquisition of Northwest Airlines, which has a large East Asia presence.

According to Murayama, JAL accounts for 22 percent of flights between Japan and U.S. If JAL were to leave oneworld, the group’s share of flights between Japan and U.S. would plunge to the 8 percent held just by American Airlines.

As part of the court-led rehabilitation plan for JAL, ETIC says it is likely to eliminate 14 international and 12 domestic routes, according to reports.

There are also 25 airports that only accommodate flights operated by the JAL group, including Tokachi Obihiro Airport in Hokkaido, which has flights to and from Tokyo and Nagoya, according to the aviation industries division of the Land, Infrastructure, Transport and Tourism Ministry.

Their fate remains unclear.