JAL and American team up on joint revenue scheme

Originally published on www.businesstraveller.asia 21/01/2011 - Filed under: News »

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Japan Airlines (JAL) and American Airlines (AA) will enter a revenue sharing scheme on transpacific flights from April 1, 2011, intended to bring enormous benefits to both the carriers and their customers. The agreement was reached after nearly a year of negotiations.

Facilitating the development was the US-Japan Open Skies Agreement, signed on October 25 2010, and the anti-trust immunity granted to the carriers on November 11, 2010.

Revenues will be split between the JAL and AA, regardless of which airline passengers choose to use on transpacific routes. Sze Hunn Yap, JAL spokesperson, said: “Because both airlines will share revenue earned on these applicable flights regardless of which airline operates it, the two airlines have incentives to sell seats on each others’ flights. It will be a move from being competitors on the route to being collaborators.”

Initially, the move applies to 10 transpacific routes between Japan and North America, but with plans to expand services across more routes. The current destinations are key gateway cities, enabling passengers access to connecting flights for other cities in Japan or the US.

The first JAL routes to begin services under this business model depart from Narita to New York, Chicago, Los Angeles and Vancouver and from Haneda to San Francisco, while AA will begin services between Narita and Dallas, New York, Chicago and Los Angeles and Haneda to New York. Eventually, upon approval from Chinese authorities, the two carriers will also include Beijing-Chicago, Shanghai-Chicago and Shanghai-Los Angeles routes under the same stipulations. In total, they plan to operate 123 codeshare routes with scope for further expansion.

Yap said: “The two companies bring together their unique and complementing strengths, which makes this a synergetic partnership that will benefit the customers.” For its part, JAL offers the premium economy product that AA does not have, while AA will contribute a large fleet of 900 aircraft. Both also provide each other with extensive domestic networks.

Other than a larger network of destinations to choose from, the joint venture provides travellers several other advantages, from easier booking facilities and shared benefits for both loyalty programmes to more synchronised schedules. Both carriers’ websites will share content, enable online booking and check-in facilities for either of the carriers. Members of AAdvantage and JAL Mileage Bank will also be able to partake in each other’s promotional mileage schemes and earn or redeem miles on each others’ flights.

Yap stressed: “Both programmes will retain their individual loyalty programs. American and JAL will remain as separate, individual brands so American will maintain their AAdvantage program just as JAL will maintain its own JAL Mileage Bank program.”

JAL and AA will synchronise their schedules to reduce connection time and increase transit options to cities beyond the airport hubs. From March 27, JAL will realign flight timings to increase convenience for onward connecting flights, while AA will do the same for routes in the reverse direction from April 5 onwards. For instance, the Narita-Chicago route will depart at 1100 instead of 1140, therefore arriving in Chicago at 0840, allowing passengers to choose from 45 connecting flights within three hours of arrival as opposed to the 43 that were available with the previous schedule.

Some changes at the airport will take place such as JAL and AA passengers enjoying reciprocal lounge access and JAL relocating from Terminal 3 of O'Hare International Airport to Terminal 5 to ensure seamless connections in Chicago. The transfer is scheduled on March 27.

The joint venture is expected to enhance profitability for both carriers and boost JAL’s corporate restructuring after it filed for bankruptcy last year. According to JAL president, Masaru Onishi, the partnership is expected to yield US$156 million in combined annual incremental benefits. JAL, in a bid to make a comeback, also unveiled an updated version of its red-crown crane logo as part of its restructuring project (see story here), which involved cutting off several routes over the last year (see story here).

For more information, visit www.aa.com/moreasia

Alisha Haridasani