Company Watch - Japan Airlines Group.

Mar 5, 2007

EU, US Agree Tentative 'Open Skies' Deal. The European Union and United States agreed on Friday to the outlines of a new pact to open transatlantic aviation markets, smoothing over a rift on airline ownership in the hope of boosting traffic and creating jobs. The executive European Commission said the provisional "open skies" deal covered ownership and control rights over US airlines by EU investors and would allow the EU to restrict US investment in EU airlines. Mar 1, 2007

European Union and United States agreement would also include provisions on antitrust immunity to facilitate airline alliances. The deal, if approved by EU transport ministers, would go into force in October. The two trading partners have been working for years on a way to increase competition between EU and US airlines and replace bilateral agreements between Washington and some EU nations with a broader [sup.3]Open Skies[sup.2] pact to include more countries. But a tentative agreement sealed in November 2005 had remained in limbo after Washington withdrew a proposal that would have eased restrictions on foreign investment in US airlines. The two sides reached a breakthrough, making "decisive progress" on a provisional pact that was ready to go before EU transport ministers on March 22, said Michele Cercone, spokesman for European Transport Commissioner Jacques Barrot. The draft resulted from renewed talks that began earlier this year and continued in Brussels this week, he said. Mar 1, 2007

For the European Union and United States [sup.3]Open Skies[sup.2] agreement, the Association of European Airlines (AEA), which represents carriers such as British Airways, Lufthansa and Air France KLM, said the provisional pact appeared to show US movement on European demands that EU carriers have more opportunities to invest in US counterparts. "Our initial reaction is that there seems to be a substantially improved balance in the wording of the agreement," AEA Secretary General Ulrich Schulte-Strathaus said in a statement. Germany, which holds the rotating EU presidency, has said the 27 nation bloc would continue to press for a change in the US limits on foreign investment. Mar 1, 2007

In the European Union and United States [sup.3]Open Skies[sup.2] agreement, the United States has said it would not re-table a proposal allowing international investors some decision-making power in US airlines. The EU says a pact would generate 26 million additional transatlantic passengers over the next five years, provide up to EUR12 billion euros (USD$15.8 billion) in economic benefits, and create 80,000 new jobs in the EU and United States combined. Mar 1, 2007

DOT to investigate stranded passengers Transportation Secretary Mary Peters said she is concerned about the recent situations in which airline passengers were delayed aboard aircraft on the ground for long periods of time. She said the DOT inspector general will investigate recent incidents involving stranded passengers. Feb 28, 2007

FAA reauthorization remains group's top priority, May says The reauthorization of the FAA and its plan to upgrade the air traffic control system is the top priority for the Air Transport Association, President and CEO James May said in an interview with Forbes. The FAA has proposed a user-fee system to fund ATC, and the ATA has called the plan "a step in the right direction." Feb 28, 2007

European Commission calls for comment on abolishing or revising GDS regulations. The European Commission asked for public comment on whether the Code of Conduct for Computerized Reservation Systems, first established in 1989, should be revised or abolished. The EC noted that since the last change to the Code of Conduct, most airlines have divested their holdings in GDSs. Of the four major GDS companies, only Amadeus still has some airline ownership: Air France/KLM owns 23.2%, and Lufthansa and Iberia each own 11.6%. Feb 27, 2007

The EC pointed out that the U.S. opted for total deregulation of the GDS industry, while Canada "opted for a partial but still far-reaching deregulation." Market evolution in the U.S. has led to a reduction of airline booking fees, so U.S. carriers have lower distribution costs than their European counterparts, the EC said. "Although the introduction of per-segment charges on the travel agents indicates a transfer of the booking costs from the airlines to the travel agents, we do not have evidence whether the full costs have been passed on," the EC added. In light of these developments, the EC asked whether general competition rules are a sufficient remedy or deterrent to the abuse of market power Feb 27, 2007

The EC said, "alternative distribution channels are gaining ground, mainly due to the development of direct Internet sales." Internet penetration is likely to increase, it said. In addition, some of the larger travel agencies in the U.S. have established direct links to airlines that bypass GDSs. While the "GDS new entrants" have yet to establish a significant foothold in the market, they "at least contributed to pushing the traditional CRSs in adapting and modernizing their tools," the EC said. Feb 27, 2007

Air Transport Assn. board of directors, apparently hoping to forestall a push by consumer groups and politicians for so-called "passenger bill of rights" legislation, took the initiative at a meeting last week in Washington and said it is working to develop procedures for handling delays caused by extreme weather. ATA members transport more than 90% of US airline passenger and cargo traffic. The proposal calls for carriers to work with FAA to develop a plan that would enable passengers on long-delayed flights to return to the terminal without the aircraft losing its flight position in the departure sequence. In addition, passengers who remain onboard a delayed flight for an extended period should be provided basic necessities such as food, water and functioning lavatories. The organization also called on the US Dept. of Transportation to meet with FAA, airlines and airports "to discuss procedures to better respond" to long delays. "We believe these steps offer the best course of action," ATA President and CEO Jim May said. "A rigid national regulation would be counterproductive and could easily result in greater passenger inconvenience." Feb 26, 2007

Open skies talks expected to resume today. The lack of an initial open-skies agreement could increase tensions for U.S.-EU airline operations, experts warned. Negotiations resume today in Brussels. Experts also note that easing U.S. restrictions on foreign ownership rules could improve the chances of reaching an agreement. Feb 26, 2007

Heli Air, Air Sofia, Bright Aviation Services,Scorpion Air and Vega airlines

The European Commission has not publicly stated that it was prepared to place a blanket ban on Bulgarian airlines, the Bulgarian situation has been under discussion by the European Aviation Safety Committee on whose advice the blacklist is amended. European officials have already prompted similar action by Russian authorities against nine carriers, after drawing attention to safety concerns arising from airport ramp inspections of aircraft and indicating that failure to address the matter could lead to a blacklist ban. Feb 26, 2007 03/05/2007

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Feb 26, 2007