Cablegate: Upcoming Civ Air Talks: More of the Same?

VZCZCXRO5147
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2982/01 3002252
ZNR UUUUU ZZH
P 262252Z OCT 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 8270
INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 6031
RUEHBY/AMEMBASSY CANBERRA PRIORITY 2829
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 8597
RUEHUL/AMEMBASSY SEOUL PRIORITY 2029
RUEHGP/AMEMBASSY SINGAPORE PRIORITY 7241
RUEHML/AMEMBASSY MANILA PRIORITY 1265
RUEHBK/AMEMBASSY BANGKOK PRIORITY 4528
RUEHHI/AMEMBASSY HANOI PRIORITY 1090
RUEHNH/AMCONSUL NAHA PRIORITY 2955
RUEHNAG/AMCONSUL NAGOYA PRIORITY 8666
RUEHOK/AMCONSUL OSAKA KOBE PRIORITY 4379
RUEHKSO/AMCONSUL SAPPORO PRIORITY 1169
RUEHFK/AMCONSUL FUKUOKA PRIORITY 0596
RUEHIN/AIT TAIPEI PRIORITY 7173
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 03 TOKYO 002982

SENSITIVE
SIPDIS

STATE EEB/TRA FOR DAS JOHN BYERLY
STATE FOR 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: UPCOMING CIV AIR TALKS: MORE OF THE SAME?

REF: A. TOKYO 2272
B. TOKYO 2108

Sensitive But Unclassified. Contains Proprietary Information.

1. (SBU) Summary: The upcoming bilateral civil aviation
talks in Tokyo October 29-30 offer an excellent opportunity
to urge the GOJ to undertake needed meaningful liberalization
of Japan's aviation sector. However, recent discussions with
the Japan Civil Aviation Bureau (JCAB), Japanese airline
officials (from ANA and JAL), and other aviation-related
interlocutors suggest the GOJ will continue to hold to its
long-standing "go slow" line on sectoral reform. The GOJ
hopes the talks will focus on the "overall framework" for
2010, including expansion of operations at both Narita and
Haneda airports.

2. (SBU) During your meetings with GOJ and Japanese airline
counterparts, we suggest making the following points:

-- Express appreciation for the efforts Japan has made to
liberalize its aviation sector.

-- Underscore the benefits of the U.S. Open Skies model and
of anti-trust immunity, especially potential benefits to
continued skeptic, JAL.

End Summary.

What the GOJ Wants
-------------------

3. (SBU) A JCAB official told us the GOJ is making progress
on aviation liberalization, and expansion of third and fourth
freedoms -- the right for an airline to deliver passengers
from the home country to another country and the right for an
airline to transport passengers from a foreign country to the
home country -- are the basis for Japan's aviation
liberalization policies. They argue this approach conforms
to the 1998 bilateral aviation Memorandum of Understanding
(MOU), which states the GOJ will pursue full liberalization.
(Note: The official claimed that in the June 2008 informal
talks, the GOJ provided a road map for expanding third and
fourth freedoms that exclude Haneda and Narita airports,
arguing that they already operate at full capacity. End
Note.) The Asian Gateway Initiative, which was announced in
May 2007 and encourages liberalization of air services
between Japan and other Asian countries, comprises a key
component of the GOJ approach. The GOJ has so far signed
agreements with Korea, Hong Kong, Thailand, Vietnam,
Singapore, and Macao. Negotiations with the Philippines are
scheduled for November, while discussions about a possible
agreement continue with China. The JCAB indicates it would
be satisfied with a liberalized agreement with the U.S.
including third and fourth freedoms. When asked about the
2010 APEC Bogor goals for aviation liberalization, JCAB noted
these goals are only voluntary, and that many APEC economies
remain unenthusiastic about achieving this objective.

4. (SBU) The JCAB has said it expects this round of civ air
talks to address the overall framework for 2010, including
the Narita and Haneda expansion that will be completed that
year. The new lead negotiator, JCAB Deputy Director-General
Kenji Takiguchi, aims to achieve "mutually beneficial
results...from a series of negotiations," according to JCAB.
An ANA representative said he understands Takiguchi already
plans for another round of talks this spring, thus suggesting
the GOJ sees it unlikely an agreement will be reached now.
If the USG proposes increased liberalization, the GOJ will

TOKYO 00002982 002 OF 003

demand an equalization of slots, he continued. It will be
very difficult for the GOJ to make compromises this year due
in large part to Japan's political situation.

What the Airlines Want
----------------------

5. (SBU) ANA representatives hope the USG will take a
"constructive and positive" approach to Haneda's expansion.
Specifically, they advocate that the USG accept restrictions
on access at Haneda in exchange for a phased in
liberalization. ANA also wants further discussion between
the USG and GOJ on anti-trust immunity, a key component of an
Open Skies regime. JAL representatives, in contrast, are
more interested in progress on other agenda items raised
during previous talks: U.S. anti-cabotage rules as they
relate to JAL/Jalways routes to Hawaii; the Fly America Act;
and their perception of inequality in slot distribution at
Narita. Anti-trust immunity for alliance partners is not on
JAL's agenda, according to ANA officials. A JAL
representative says he does not understand what could be
possible with anti-trust immunity, while a JCAB official told
us separately Japanese carriers are uninterested in
anti-trust immunity.

Different Interpretations of Open Skies
---------------------------------------

6. (SBU) An ANA representative said the GOJ views Open Skies
as a regime that favors the country with the most airport
slots for its carriers. Should Japan conclude an Open Skies
agreement with the United States, the GOJ fears being
inundated by similar requests from neighboring countries,
particularly China and Korea. Japanese carriers would be
unable to compete, he said. Both ANA and JAL representatives
queried us about whether an Open Skies agreement between the
U.S. and Japan that excludes Narita and Haneda airports might
be possible; ANA contends Narita is "almost liberalized"
anyway. A JAL representative claimed the Fly America Act and
U.S. anti-cabotage rules unfairly discriminate against
Japanese carriers. It is not right that the U.S. maintains
such restrictions while pushing for Open Skies, he said. He
also commented that the high proportion of U.S. slots at
Narita airport relative to other countries "puts the U.S.
twenty meters ahead in a 100-meter race." ANA has commented
separately it will be "impossible" to convince JAL to accept
Open Skies, an assertion JAL denied in a separate
conversation.

7. (SBU) A Kansai International Airport Corporation (KIAC)
official suggested Japan has been more receptive to Open
Skies during previous civil aviation talks than has the U.S.
KIAC Wants to encourage third-country carriers to fly to the
U.S. via KIX, something Open Skies would facilitate.
Previously, Japanese carriers were interested in operating
Japan-U.S. routes that included onward flights to a third
country. However, the current economic downturn has
diminished interest in such routes, according to a KIAC
official.

In Search of More Slots
-----------------------

8. (SBU) An ANA representative said his airline was
frustrated by the limited number of slots for international
flights at Haneda airport (only 30,000). Most local
governments, other than Chiba Prefecture (where Narita is
located), want more flights. The Ministry of Land,
Infrastructure, Transport, and Tourism (MLIT), for example,

TOKYO 00002982 003 OF 003

can therefore only increase slots only incrementally, he
claimed. ANA does believe MLIT will increase international
slots over time, but will not say so publicly due to
political considerations.

9. (SBU) A JCAB official noted the GOJ's recent progress in
increasing slots at Tokyo's airports, e.g., negotiations
between MLIT and local governments that resulted in 20,000
new slots at Narita in addition to the airport's current
200,000 slots. The same JCAB official asserted the USG
should understand MLIT can only achieve this expansion at
politically sensitive airports like Narita and Haneda through
quiet, behind-the-scenes negotiations with various
stakeholders. Western-style transparency is not an option,
he contended.
SCHIEFFER

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