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JAL ups the ante against ANA via alliances

Expansion of oneworld adds Brazil's TAM, US Airways

by Keiichiro Otsuka

Kyodo

The latest expansion of the oneworld global airline alliance is a boon to Japan Airlines Co. on several fronts, including the access it will get to the Latin American market via new Brazilian partner TAM Airlines.

The other new carrier is US Airways, which is one of the world’s largest airlines but now a unit of the alliance’s founding member, the American Airlines Group, the world’s largest airline and JAL’s key trans-Pacific partner.

TAM and US Airways have left the Star Alliance, oneworld’s larger rival, which also includes All Nippon Airways Co., JAL’s principal competitor.

A JAL executive was upbeat about oneworld’s biggest single expansion since its foundation in 1999, saying about the former Star Alliance members, “We want to see them switch over from ANA” as partners.

Executives of oneworld carriers celebrated the two new additions in a ceremony staged at TAM’s hangar at Sao Paulo’s Congonhas airport on March 31.

During a lunch meeting of the executives, JAL Chairman Masaru Onishi called on TAM CEO Marco Bologna to start code-sharing, a marketing agreement to sell seats on each other’s flights by adding their own commercial flight codes.

The TAM official readily agreed to the proposal, which would allow JAL to reach beyond its network destinations in Europe or North America to TAM’s base in Brazil and elsewhere in Latin America.

JAL is aiming for more embracing cooperation with the new Latin American partner than a simple agreement on reciprocal benefits for members of their frequent flyer programs, one of the purposes of a global airline alliance.

“South America is no doubt an area expected to continue achieving strong growth, though it may not have the momentum of several years ago, and I don’t think it is as vulnerable to major risk as China is,” Onishi said in an interview.

Brazil offers business and leisure travel potential for JAL. It is a magnet for investment by such firms as Honda Motor Co. The host of the FIFA World Cup this year and the 2016 Rio de Janeiro Olympics, the country is also home to the largest Japanese community outside Japan.

TAM’s shift away from Star Alliance is an opportunity for JAL to regain its foothold in Brazil. The Japanese carrier gave up the Tokyo-Sao Paulo service via New York in September 2010 as part of its restructuring months after its collapse.

ANA was quick to snap up the route JAL abandoned, forging a code-sharing accord with TAM, then a Star Alliance member, in September that year to link its Tokyo-London flight with TAM’s service from the British capital to Sao Paulo.

While JAL offers some Latin American destinations through joint operations with American Airlines, Onishi hinted that teaming up with TAM could help catapult JAL into a reinforced presence in Latin America.

“TAM’s participation in oneworld will provide us with a greater insight into the domestic Brazilian market as well as the market breadth stretching from Latin America to Asia, and we’d like to make full use of it in making any judgment,” he said.

Asked about the possibility of resuming the Tokyo-Sao Paulo service using its own aircraft, Onishi said, “We’ll never rule that out.

“We used fly to Latin America in the past, and we have that very strong desire to fly there,” he said. “What we needed to do first was to gain an overview of the market, and that has been made possible with TAM having joined oneworld.”

ANA advanced into international flights in 1986, much later than JAL, which started its first international scheduled service in 1954.

Being a late starter in the international business, ANA “learned methods and techniques from Star Alliance partner companies,” an ANA executive said.

In contrast, JAL was a proud carrier that attempted to aggressively push for expansion of its own international network. “We were rather keen on preserving our face, running some routes without taking profitability into consideration,” a former JAL official said.

That was perhaps an attitude that led the former national flag carrier to collapse in January 2010. JAL emerged from court-backed corporate rehabilitation in March 2011. JAL has since shifted its focus and resources from building its own network to collaborating with the oneworld alliance that it joined in April 2007.

Seven years later, JAL started a joint operation with British Airways and Finnair, both oneworld members, sharing a pool of fare revenues on their services linking Japanese and European cities on April 1.

Allister Paterson, chief commercial officer of Finnair, expressed confidence in their joint undertaking, saying: “I have the greatest respect for Japan Airlines. Our joint venture with JAL and British Airways, we are the largest mover of passengers between Japan and Europe.

“Specifically, what I think it does for customers is now there is better itineraries, better pricing, so we hope that will increase over time the number of passengers,” he said.

Meanwhile, ANA is not just sitting back. It has stepped up its joint operation partnership with Lufthansa German Airlines, starting in March daily services linking Munich and Tokyo’s Haneda airport.