OSAKA -- Nippon Travel Agency Co. and West Japan Railway Co. are in talks over the integration of their travel service operations to create Japan's second largest travel agency after Kinki Nippon Tourist Co., sources at the two companies said Saturday.
The integration would link Nippon Travel, Japan's third-largest travel agency, and JR West's travel service division, which was spun off and placed under a separate headquarters in spring last year, the sources said.
The plan is the result of JR West's purchase of a 33.3 percent stake in Nippon Travel last year from East Japan Railway Co., making it the largest shareholder in the company.
JR West's travel service division has retail outlets mainly at JR West stations in western Japan, many of them in locations close to Nippon Travel's outlets.
JR West and Nippon Travel expect the integration to make their travel service operations more effective through the closure of duplicating outlets, the sources said.
However, some industry observers said obstacles to the integration are likely to include the need to legally spin off JR West's travel arm into a full corporation and the problem of Nippon Travel's accumulated losses.