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No Losers in JAL Battle

Although Japan Air Lines will maintain its alliance with AMR, Delta benefited by the rigorous competition.
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) -- Nearly everybody won in the battle for a partnership with floundering Japan Air Lines.

Bankrupt JAL said Tuesday it will retain its partnership with



. The


ended months of negotiation with


(DAL) - Get Delta Air Lines, Inc. Report

, which had sought to take over as the U.S. partner to the best positioned carrier at Tokyo Narita, the most important airport in Asia.

In the end, JAL decided it could not afford to switch partners at the start of an estimated three-year restructuring process. "If we don't survive the first two years, there will be no future for JAL after the third year of restructuring," Daiji Nagai, senior vice president of corporate planning, told reporters,

The Associated Press

reported. "We decided that we can minimize risk by staying with American," he said.

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For American and the struggling Oneworld alliance, the benefit is obvious. The pair needed to retain a competitive position in Asia, especially because they have for so long been disadvantaged in Europe. There, rivals Delta and



have antitrust immunity with their principal partners, but regulators continue to dawdle over whether to allow American and

British Airways

to make the exact same arrangement.

American CEO Gerard Arpey deserves credit. Particularly after the Japanese declared they did not need U.S. investment in their flag carrier, American made

a strong case

that regulators would never approve a JAL/Delta bid for antitrust immunity across the Pacific. Was that case realistic? Probably, although in every airline merger and ATI application in history, experts and lawyers on both sides have offered assurances that their cases are certain to predominate.

Another winner in this decision is Japan, whose airport is assured of strong competition between three roughly equal partners. At the moment, Delta operates a small hub at Narita. United has both a Narita hub and a partnership with


, while American partners with JAL. As a result, the market is split between the world's three global aviation alliances, with each claiming roughly a third.

On a certain level, the three alliances hate one another. From this, travelers benefit, despite occasional poorly informed mutterings in Congress that code-sharing within alliances does not foster competition.

As for Delta, it showed the world that, despite completing what is widely viewed as the most successful merger in airline history, it will not rest on its laurels. The merger with Northwest provided many benefits. But since the merger was completed, Delta has continued to push for advantages.

In New York, the world's biggest aviation market, a planned asset swap with

US Airways


would, if approved, enable Delta to operate hubs at both Kennedy and LaGuardia airports, something no airline has ever tried. In Asia, even without a JAL partnership, Delta is stronger because it signed an agreement with


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that makes it stronger in Seattle, the closest U.S. gateway to many key Asian markets.

As aviation consultant Mike Boyd has said, Delta's assault on JAL was "a good strategy -- sound, wonderfully nasty competition (that) shows you why we should be proud of the U.S. airline industry." Boyd added: "The whole global airline industry is in the tank, except in the U.S., where we have visionary leadership that goes for each other's throats. This may be the one U.S. industry that can take over the world."

In all fairness, it should be noted that Delta's bid for JAL also produced one big loser. Japanese media, a few short weeks ago, were loudly proclaiming that Delta was certain to emerge victorious. Since then, Japanese media have moved on to an even better, if similarly questionable, story. Now, they are busily reporting that


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cannot possibly survive its current problems. With Toyota shares down 19% since mid-January, is that a buy signal?

-- Written by Ted Reed in Charlotte, N.C.