The Fair Trade Commission on Friday gave its final seal of approval to the planned integration between Japan Airlines Co. and Japan Air System Co.

The merger will create the nation’s largest airline.

The trade watchdog halted the airlines’ original integration plan last month, releasing an interim report in which it claimed that the maneuver would hinder competition in the domestic airline industry by cutting the number of major airlines from three to two.

The report forced the airlines to review their integration plan.

Following the approval of their revised plan, JAL and JAS formally announced they will give up slots for nine flights at Tokyo’s Haneda airport to new carriers in an effort to promote competition.

Meanwhile, the Land, Infrastructure and Transport Ministry will set aside these slots specifically for new entrant carriers that have less than six slots at Haneda airport and Itami airport in Osaka.

The ministry will also create more “competition promotion slots” for new carriers in February 2005, when the ministry plans to review overall slot allocation at Haneda based on the Aviation Law.

In the light of these measures, the JAL-JAS integration will not hinder competition in the domestic transportation industry, the Fair Trade Commission has concluded.

This decision will allow JAL and JAS to integrate under a holding company in October.

The move comes amid intensifying competition in the global airline industry.

Other measures that the airlines and the transport ministry are planning to adopt include:

The merged entity will lower its regular fares — mostly for corporate clients — on all major domestic routes by 10 percent. The new fares will be maintained for at least three years.

The proposed JAL-JAS group will give up three more slots at Haneda if new carriers require them by February 2005.

The group and ANA will be required to give up some airport facilities such as check-in counters and boarding bridges if they want to use some of the “competition promotion slots” at Haneda airport. The usage will be on a temporary basis.

All Nippon Airways, the other major domestic player, will probably face tougher competition both from the proposed JAL-JAS group and other carriers that offer low-price services such as Skymark Airlines Co. and Hokkaido International Airlines Co., better known as Air Do.

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