TokyoTomo Travel Guide

During a regular media briefing, Takaya Okuyama, Director & Secretary General of JATA, Japan Association of Travel Agents, commenting on the domestic agency commission which All Nippon Airways aims to slash, said that it will before long strongly urge the airline to maintain the currently applicable clauses related to the agency contract system. JATA is not in the position to negotiate with ANA on the agency commission specifying a rate of commission, but intends to “strongly urge the airline to maintain and foster a mutual relationship between the airline and travel industry under the same umbrella.

Okuyama, while showing his understanding for the severe business conditions and climate continuously faced by the airlines, intends to include in a letter of request to ANA a strong message that it should be logical for both parties to cooperate even under a severe market environment in efforts to stimulate and boost the travel demand. In this context, JATA is going to request for the current agency contract to remain unchanged.

In view of the reduction of the agency commission, ANA is said to have already started negotiations with its major travel agencies. Okuyama said, “Since JATA is not a contracting party, it has no intention to interfere with the ongoing negotiations,” adding, however, that it is a challenging issue for JATA how to represent the interests of small and medium- sized travel agencies without conflicting with the existing antitrust law..

A specific date for the request by letter is not decided yet. It first needs an approval of its domestic travel committee, Okuyama reminded, to submit the letter of request to ANA under the name of JATA chairman. According to JATA public relations office, its domestic travel committee meeting is slated for November 26, but it may be also possible that the approval will be obtained prior to the meeting by phone to the respective committee members. Toshifumi Tabata, JATA’s Director Outbound Travel explained also on November 18 that he suggested to the Domestic Travel that the said request letter be forwarded to ANA as early as possible based on the previous experience with the reduction of the international agency commission. He also indicated a possibility of further clarifying with the Japan Fair Trade Commission as to how much JATA is allowed to influence the burning issue with ANA.

Source: Travel Vision

Travel Vision Inc. provides information on the travel industry in Japan via "Daily Travel Vision", a Japanese-language e-mail newsletter, and the "Travel Vision" website. There are nearly 110,000 people working in the Japanese travel industry, and Travel Vision is proud to be bringing travel news to more than 30,000 people through Daily Travel Vision.

According to International Air Transport Association (IATA), seven countries including United States, endorsed by the European Commission, declared on November 16 to waive the national ownership requirements pertaining to the bilateral air service agreements. Currently, a bilateral air service agreement must be concluded between the two countries concerned to start new scheduled services. The national ownership requirement forms part of the bilateral air service agreement, limiting a traffic right to an airline in effect owned by a government or its nationals. If, for instance, Japan concludes a bilateral air service agreement with a certain country, Japan reserves the right to limit a traffic right to the airline owned by the counterpart or its nationals holding more than half of its capital.

The countries that signed the documents other than the United States and the European Commission are Chile, Malaysia, Panama, Singapore, Switzerland and the United Arab Emirates. The declaration reads that each state should respect the policy of other countries in seeking to encourage foreign investment in their airlines and, accordingly, should waive the national ownership requirements or otherwise should not exercise rights under the existing bilateral air service agreements. In another words, it implies that an airline, even if bought by a foreign capital, can still maintain its own flight operations. A buy-out by foreign capital, therefore, will become easier.

IATA, who is of the opinion that the restrictions including the national ownership requirements weaken an airline’s financial structure, considers that the waiver of the national ownership requirements should lead to a cross-border formation of an airline group, thus propelling a possible restructuring of the airline industry. The declaration is non-binding, but it is a fact that those seven countries and the European Commission who signed the declaration represent some 60% of commercial aviation worldwide. It is indeed a strong message, as IATA indicated, that the declaration shows a future direction to which the airline industry is expected to go. Remaining
countries may simply not be able to ignore their future direction. IATA intends to call for even more countries to join the agreement also in the future.

In Japan, in terms of project approval, foreign investment is limited to a capital ratio of one-third. From the fiscal year 2007 to 2008, the “KISEIKEN,” the “Study Group on Government Regulations and Competition Policy” under Japan Fair Trade Commission (JFTC) held series of discussions regarding the application of the antitrust law to the existing aviation service agreements, but it turned out to be a dead issue amid the severe aviation environment faced by the airlines.

Also, the declaration emphasizes “Freedom to access market” and “Freedom to set fares.” In terms of the freedom to market access, the airlines concerned consider, in the declaration, “waiving the provisions in the existing air service agreements that limit the number of airlines with or without restrictions imposed on the respective market infrastructures.” Equally, in terms of the freedom to set fares, they also consider “waiving the provisions which require the filing of tariffs” and also “waving or otherwise abstaining from the provisions which interfere with pricing policies made in accordance with the market mechanism.”

Source: Travel Vision

Travel Vision Inc. provides information on the travel industry in Japan via "Daily Travel Vision", a Japanese-language e-mail newsletter, and the "Travel Vision" website. There are nearly 110,000 people working in the Japanese travel industry, and Travel Vision is proud to be bringing travel news to more than 30,000 people through Daily Travel Vision.