ANA frets being undercut by state-rescued JAL

by Kazuaki Nagata

With concerns being raised over whether using public funds to revive Japan Airlines Corp. may skew fair competition, transport minister Seiji Maehara said Friday the Fair Trade Commission must outline how state-rescued firms operate in the market.

“This issue has been pointed out in other industries as well. So I think it is better that the FTC issues a guideline that can be applied to all industries instead of the transport ministry issuing one pertaining to JAL,” Maehara told reporters.

It is possible competitors may find themselves at a disadvantage in relation to JAL’s reconstruction, and the government must bear this in mind, he said.

His remarks came after JAL’s main competitor, All Nippon Airways, raised the issue earlier this week.

Just a day after JAL filed for bankruptcy under the Corporate Rehabilitation Law Tuesday, ANA President Shinichiro Ito asked that Ryuhei Maeda, head of the ministry’s aviation bureau, issue restrictions in relation to the market competition for companies that receive public funds for their reconstruction.

There currently are no guidelines or restrictions for companies that have received public funds for rehabilitation.

ANA cited European Union restrictions, including the principle that a company that has received public funds cannot undercut the market.

“A massive amount of public funds will be used (for JAL’s reconstruction), so I expressed our concern about the possibility that fair market competition may be distorted,” Ito said Wednesday.

JAL, Japan’s biggest airline, is undergoing reconstruction under the direction of Enterprise Turnaround Initiative Corp of Japan, which is partially state-backed.