REFILE-Japan to favour ANA in Haneda allocation with over half of slots -sources

Tue Oct 1, 2013 9:08pm EDT

By Tim Kelly and Kentaro Sugiyama

TOKYO Oct 1 (Reuters) - Japan's government plans to award ANA Holdings, the nation's biggest carrier, more than half of 20 new international arrival and departure slots at Tokyo's Haneda Airport, more than twice what it will give to rival Japan Airlines, two sources with knowledge of the decision said on Tuesday.

The allocation, which could be announced as early as Wednesday, concludes a politically charged battle over landing rights that has threatened to embroil foreign carriers.

The slots, which airlines normally retain as long as they stay in business, can be worth around $20 million a year each in operating profit, industry analysts have told Reuters. ANA lobbied hard for a big share of the landing rights, arguing that it had been put at a competitive disadvantage by JAL's $3.5 billion taxpayer funded bailout in 2010.

Prime Minister Shinzo Abe's government, which was in opposition when JAL was rescued, has proved sympathetic to ANA's call for a rebalance. Although the latest allocation falls short of ANA's demand for all the new slots, it represents a blow to JAL.

ANA will receive 11 slots against five for JAL, the sources told Reuters on condition they weren't identified. The distribution of a further four slots designated for routes to and from the United States will be decided after Japan concludes bilateral negotiations with the U.S. government, they added.

Such allocations are normally split down the middle by civil aviation officials, but the latest allocation was instead decided with heavy involvement from the Prime Minister's office, industry sources have said.

As JAL is a member of the OneWorld carrier alliance, fellow members including British Airways and American Airlines voiced concern that a decision favouring ANA at Haneda, the world's fourth-busiest airport, would hurt their grouping by giving ANA and thus its fellow Star Alliance members an edge at the hub.

With no new runways or airports planned for Japan's capital, any such disadvantage for JAL and its partners could be locked in for years.

JAL, once Asia's biggest carrier, has argued that any competition issues should be settled through other means than slot allocations. ANA insisted that a bankruptcy process that wiped out most of JAL's debt while allowing it to keep tax credits needed to be addressed urgently.

In the quarter to June 30, JAL made an operating profit of 22 billion yen ($224.20 million), while ANA posted a 5.6 billion yen operating loss.