eFlyer Asia - Intelligence

Oneworld Ready To Invest In JAL

Japan Airlines’ partners in the oneworld alliance have declared their support for the airline and are asserting that oneworld is the best alliance for JAL, and the best way to maintain trans-Pacific and regional competition. This follows Delta Air Lines’ and SkyTeam’s offer of USD 1 million investment in JAL in November, which included compensation for the cost involved in switching alliances from oneworld to SkyTeam.

Between April and September this year, JAL lost USD 1.5 billion and is struggling with debts of USD 15 billion. However the carrier’s network in Asia, especially China, makes it attractive to international airlines.

Oneworld members have put together a “total alliance value proposition” for JAL totaling some USD 1.8 billion of investment and projected additional revenue. The proposition includes investing in the restructuring of JAL, through a link with the TPG investment group, which has indicated it, with American Airlines, would be willing to provide funding of up to USD 1.1 billion.

“The oneworld alliance already has a significant investment in the success of Japan Airlines, and we are prepared to do even more to ensure that American, oneworld and JAL have a successful partnership for the long-term. We believe this, in turn, will allow JAL to produce significant benefits for all of its stakeholders,” Said Gerard Arpey, oneworld governing board chairman and American Airlines’ chairman and chief executive.

The alliance members argue that by staying with oneworld, Japan Airlines avoids network overlap. In Asia, SkyTeam members Delta/Northwest, Korean Air and China Southern all compete for the same regional slice of the alliance pie that JAL has to itself in oneworld. It proposes that avoiding network overlap maximizes passenger and revenue flows to JAL from its alliance partners, and will therefore help keep more of its routes and frequencies financially viable.