LITTLE PROGRESS IN U.S.-JAPAN CIV AIR TALKS

UNCLAS SECTION 01 OF 04 TOKYO 003117 SENSITIVE SIPDIS STATE FOR DAS JOHN BYERLY AND EAP/J DOT FOR KEITH GLATZ AND JENNIFER THIBODEAU USTR FOR MICHAEL BEEMAN DOC FOR EUGENE ALFORD AND DANIEL LEE E.O. 12958: N/A TAGS: EAIR ELTN PGOV ETRD JA SUBJECT: LITTLE PROGRESS IN U.S.-JAPAN CIV AIR TALKS REF: A. TOKYO 1432 ¶B. TOKYO 2982 ¶1. (SBU) Summary: Government of Japan officials held out little promise of broader liberalization of Japan's civil aviation sector during bilateral talks in Tokyo October 29-30. As in past civil aviation negotiations, the GOJ eschewed broader discussion of Japan's decade-old commitment to "full liberalization." Instead, the GOJ advocated a narrow, incremental proposal that would allow Japanese and U.S. carriers to operate only a handful of daily flights to the U.S. from Tokyo's Haneda Airport beginning in 2010 under tight restrictions, something the U.S. side noted was inherently discriminatory and would be immediately rejected by U.S. carriers. The talks plowed familiar ground on a number of "doing-business" issues, but without forward movement in specific areas. The U.S. delegation, led by DAS John Byerly, declined to set dates for a further round of negotiations. End Summary. ¶2. (SBU) The USG and GOJ delegations met in Tokyo October 29-30 to discuss civil aviation liberalization. Deputy Assistant Secretary for Transportation Affairs John Byerly and Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) Civil Aviation Bureau (JCAB) Deputy Director-General Kenji Takiguchi led their respective delegations. Keith Glatz was the senior Department of Transportation representative on the U.S. team. DAS Byerly and Glatz also met separately with Japan Airlines, the American Chamber of Commerce in Japan (ACCJ),and Jiro Hanyu of the Sasakawa Peace Foundation, a former senior official at MLIT who remains deeply engaged in transportation policy issues. Vague MLIT Timeline for Liberalization -------------- ¶3. (SBU) Deputy Director-General Takiguchi noted the GOJ ideally would like to conclude agreements with its aviation partners by summer 2009 to prepare for expansions underway at both of Tokyo's airports -- Haneda and Narita -- which are expected to be completed in 2010. He seriously questioned, however, whether a comprehensive agreement with the U.S. was possible by that time. Discussion of the "full liberalization" envisioned in the 1998 Memorandum of Understanding (MOU) requires an "equitable environment" in which to exercise those rights; it remains unclear whether fair competition can be achieved when the U.S. holds a disproportionately large number of slots at Narita, Takiguchi contended. Further, the 1998 MOU on civil aviation does not set a target date for full liberalization. Taking these factors in to consideration, Takiguchi argued the GOJ's proposal to begin service between Haneda and the United States (albeit only between 10 p.m. and 7 a.m.) would be a "step" toward liberalization. He noted that it is "extremely difficult" to set a deadline for full liberalization due to the limited number of new slots available in 2010 at both Haneda and Narita Airports. This might change in the future, but was contingent on technical issues and understandings with local communities. ¶4. (SBU) DAS Byerly said the U.S. seeks full Open Skies with Japan. The large expansion of Tokyo slots in 2010 presents Japan and the United States a "historic opportunity" to realize full liberalization of their aviation relations, consistent with the commitment of both countries in the 1998 MOU as well as with the APEC Bogor Declaration. Rather than seek a "mini-deal" that only addresses narrow issues, the GOJ TOKYO 00003117 002 OF 004 should work with the United States on a roadmap to a comprehensive agreement, which could include transitional or phased-in steps to Open Skies, DAS Byerly said. He noted it was difficult to envision how Japan would reach full liberalization if a comprehensive agreement cannot be concluded by 2010. Open Skies is possible even with space constraints and a shortage of slots, a point made clear by the Open Skies relationship between the U.S. and the UK notwithstanding slot constraints at London-Heathrow. Japan and the United States should focus on the broader interests of consumers and the U.S. and Japanese economies, and not just the narrow interests of carriers, DAS Byerly said. Haneda Airport -------------- ¶5. (SBU) Takiguchi noted MLIT's support of Haneda's expansion, as evidenced by new regulations to internationalize Tokyo's "in-town" airport, covering such areas as slot allocation and time curfews for international flights (ref A). Operating hours and other details of Haneda's operations cannot be changed, he claimed, since the Council of Economic and Fiscal Policy (CEFP),chaired by the Prime Minister, has already approved the plan. (Note: On October 30, the second day of the talks, MLIT Director-General Maeda announced at a Council for the Promotion of Regulatory Reform (CPRR) meeting a possible further increase of 20,000-30,000 international slots at Haneda Airport. End note.) ¶6. (SBU) Based on MLIT's new regulations, Takiguchi proposed three nighttime flights per day for U.S. carriers at Haneda, with a prohibition against the aircraft flying to beyond and from behind points. (Note: Takiguchi subsequently conceded that MLIT would not limit beyond rights if requested by the U.S. carriers. End note.) His proposal also included ending limitations on charter flights. (Note: ANA flies nighttime charters from Haneda Airport to Guam. End note.) Takiguchi claimed U.S. and Japanese carriers would benefit equally from the proposed new opportunities at Haneda. When pressed, Takiguchi conceded that under the new MLIT rules, Japanese carriers could theoretically fly up to twenty flights per day -- in comparison to the three he was offering for U.S. carriers -- but asserted Japanese carriers were very unlikely to do so. Narita Airport -------------- ¶7. (SBU) Takiguchi said the GOJ did not at this time intend to allocate to U.S. carriers any of the 20,000 new slots at Narita after the airport's 2010 expansion. He suggested the GOJ might even consider asking (or requiring) U.S. carriers to return some of their slots. DAS Byerly made clear that the United States would view an MLIT decision to preclude U.S. carriers from consideration for new Narita slots as contrary to the IATA (International Air Transport Association) World Scheduling Guidelines, the principle of fair and equal opportunity, and the specific understandings reached at the time of the 1998 MOU. U.S. Carriers Disadvantaged -------------- ¶8. (SBU) DAS Byerly stated the GOJ's complex plans for partial internationalization of Haneda Airport would disadvantage U.S. carriers and run counter to the principle TOKYO 00003117 003 OF 004 of fair and equal opportunity in Article 10 of the bilateral air transport agreement. Japanese carriers would be advantaged by the plan, not only because of the disparity in the number of flights, but also because of their ability to make better use of the departure and arrival windows at Haneda offered by the new regulations. For example, Japanese carriers could depart Haneda as early as 10 p.m. In contrast, U.S. carriers could not realistically depart before midnight, as they would have to fly to Haneda first and would require at least two hours to "turn" their flights. Japanese carriers could thus better appeal to Tokyo-area passengers (earlier, more convenient departure times),to behind-Japan passengers (shorter layovers at Haneda),and passengers wishing to fly beyond the U.S. gateway (10 p.m. departures from Haneda would allow Japanese carriers to connect to the last bank of flights from the west coast to the east; passengers on U.S. carriers arriving two hours later would likely be stuck on red-eye flights or have to overnight). DAS Byerly also noted the GOJ's proposed steps would saddle U.S. carriers with costly split operations between Haneda and Narita Airports, a concern that did not affect either JAL or ANA, each of which already has major operations at both airports. He underscored the benefits of Open Skies for both Japanese and U.S. consumers and carriers and described the potential for antitrust immunity for airline alliance partners. Yokota Air Force Base Dual Use -------------- ¶9. (SBU) Having previewed the matter privately with Byerly, Takiguchi formally raised possible dual use of Yokota airspace, asserting use of Yokota's runway would alleviate crowding at Tokyo's metropolitan airports. Takiguchi acknowledged DOD and MOFA have the lead on this issue, and the civ air talks are not the venue for further discussion, but nevertheless wished to inform the USG of MLIT's position. (Note: On October 29, a MOFA official told Econoff MOFA did not support raising this in the civ air talks, but that Tokyo Governor Ishihara pressured MLIT to do so. End note.) DAS Byerly said he would convey MLIT's suggestion to Washington. (Comment: In a private meeting prior to the talks, former MLIT negotiator and now JCAB Director-General Maeda also informed Byerly and Glatz of the Tokyo government's interest in dual use of Yokota. Both Maeda and Takiguchi gave the impression that they had no personal interest in pursuing the matter but instead were raising the issue on instruction and in order to report back that they had indeed done so. End Comment.) "Doing-Business" Issues -------------- ¶10. (SBU) As expected, Takiguchi raised several long-standing doing-business issues. --Backcatering: He requested the U.S. to continue indefinitely its current rules on backcatering. DAS Byerly assured Takiguchi the USG would inform the GOJ of any developments in this area and urged Japanese carriers to comment during the rule-making period. --JAL/Jalways stopovers in Hawaii: Takiguchi asked whether Open Skies could lead to a change in U.S. cabotage rules so as to allow JAL/Jalways stopovers in Hawaii. DAS Byerly answered "no" but noted that, if the GOJ were prepared to reach an Open Skies agreement if the law were amended, he TOKYO 00003117 004 OF 004 would recommend to senior officials that they consider a narrow exception in this specific case. (Comment: Takiguchi did not bite. End comment.) --Transit Without Visa (TWOV): Takiguchi asserted TWOV restricts operation to beyond points and requested the USG lift this requirement. DAS Byerly reviewed the history of this issue and the reasons for suspension of TWOV after the terrorist attack of September 11. He noted that there were no prospects for near-term reinstatement of TWOV. --US-Exit: Takiguchi raised concerns about the Administration proposal to require airlines to fingerprint departing passengers, arguing that this would place an unjustified burden on carriers. In response, DAS Byerly described recently enacted legislation that defers implementation of this proposal pending further study. ¶11. (U) DAS Byerly cleared this message after he departed Tokyo. SCHIEFFER