Cathay Pacific and Japan Airlines eye cooperation for more flight choices and better fares

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Cathay Pacific Airways and Japan Airlines are eyeing closer cooperation in a move that may give passengers a greater choice of flights and fares, especially between Asia and the United States.

Masaru Onishi, the Japanese carrier’s chairman, offered support to Hong Kong’s flag carrier and expressed an interest to collaborate as both airlines met at the International Air Transport Association (IATA) annual meeting currently being held in Cancun, Mexico.

Speaking on the sidelines of the global airline summit, Onishi reached out to Cathay, which is facing challenging times amid 600 job cuts.

“Everyone supports Cathay Pacific. I would like to say to [Cathay CEO] Rupert [Hogg] – what can I do [to help]?” Onishi said.

Japan Airlines, Cathay Pacific and its subsidiary Cathay Dragon currently have an arrangement to sell tickets and market flights on each other’s routes to Japan, known in the industry as a “codeshare” agreement.

A further arrangement between the airlines could benefit Cathay Pacific, one of Asia’s largest international carriers, while Japan Airlines also stands to gain as part of its continuing revival after bankruptcy and a government bailout at the start of the decade.

Around the region, a flurry of tie-ups involving some of the largest airlines in the world has raised competition for flights between Asia and North America, putting Cathay Pacific under more pressure.

This included American Airlines’ recent purchase of a stake in mainland China’s largest carrier China Southern, and Delta Air Lines working closer with Korean Air.

Hong Kong’s premium airline is also set to be the largest independent carrier flying from Asia to the US, and this has undermined its competitiveness, as other airlines strike deals to give passengers more choice of flights, destinations and airfares.

For Japan Airlines, which has an existing commercial relationship with American Airlines on flights to the US, a deal with Cathay Pacific could be beneficial.

In response to a question about what plans it had for stronger cooperation or a commercial pact, which could include flights over the transpacific to North America, Onishi, said: “That is exactly why we are going to have a meeting with Cathay Pacific Airways [at the IATA summit].”

He added: “We are going to do what we can do to support Cathay Pacific but we don’t know what expectations they have, so we shall see how it goes.”

A Cathay Pacific spokeswoman said the airline was not holding active talks with Japan Airlines, but added that discussions with other carriers were common at the IATA meeting, which was a good chance to address “a range of business opportunities and topics”.

She said with its global network, the airline would remain committed to growing its reach.

“As such we are open to exploring new partnerships or extending existing opportunities that will bring additional benefits to our customers.”

One potential area of partnership identified by analysts involves routes between Asia and the US, which could grant Cathay Pacific access to new markets including Honolulu, San Diego and Dallas, while shoring up its presence in New York, Los Angeles, San Francisco, Boston and Chicago.

But such agreements usually face regulatory scrutiny, and Asian aviation expert Will Horton raised possible challenges as Hong Kong and the US do not have a so-called “Open Skies” agreement which allows for a bilaterally liberalised set of air traffic rights.

Horton, a Hong Kong-based CAPA Centre for Aviation analyst, added: “Cathay Pacific and Japan Airlines could have a marriage of difficulties. Neither has proven very cooperative in existing partnerships.”

The surge in growth among carriers from mainland China has forced airlines in the region to partner or compete better. Horton said that in 2012, Cathay Pacific and Japan Airlines had more flights to North America than all other mainland airlines combined, but conditions have since changed, with the latter putting up more flights.

Danny Lee is reporting from Cancun, Mexico

Read the original story on the South China Morning Post

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