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Highlights of the U.S.-Japan Civil Aviation Agreement Fact sheet released by the Bureau of Economic, Business, and Agricultural Affairs U.S. Department of State, June 26, 2000

An agreement was reached between U.S. and Japanese negotiators on January 30, 1998. Following are the highlights of the agreement:

• Non-incumbent "combination" carriers, Delta, American and Continental, gain the right to offer an additional 90 weekly round-trip flights between the U.S. and Japan, nearly tripling their access to this market. (Combination carriers carry both passengers and cargo.)
• Two new non-incumbent carriers will be able to enter the U.S.-Japan market, one immediately and another in two years.
• Non-incumbent all-cargo carriers, UPS and Polar Air Cargo, gain valuable new opportunities to transport cargo to destinations beyond Japan. An additional all-cargo carrier will be able to enter the market in four years.

This agreement eliminates restrictions and resolves disputes for incumbent carriers.

• This agreement lifts all restrictions on the number of flights operated and points served between the U.S. and Japan by incumbent combinations and all-cargo carriers (United Airlines, Northwest Airlines and Federal Express).
• This agreement resolves the long-standing dispute over our incumbent carriers' right to fly from Japan to other international points beyond Japan.

Code sharing is permitted for the first time. U.S. and Japanese carriers can code share freely, U.S. carriers can code share among themselves on many operations to Japan and beyond, and U.S. carriers can code share with third-country carriers on operations to and beyond Japan.

Other new services will be available. Charter operations will increase in two years from the current 400 flights per year to 600 flights per year, rising eventually to 800 flights.

Distribution and pricing provisions will promote competition. U.S. carriers are guaranteed a fair and equal opportunity to contract with wholesalers and travel agents and to set up enterprises to market their services directly to consumers.

Liberalization will continue to move forward. The parties will begin talks within three years regarding a fully liberalized agreement. If we do not reach that goal by 2002, supplemental rights will be available. For example, non-incumbent combination carriers will gain the right to operate up to 35 additional weekly round-trip flights between the U.S. and Japan.

Economic benefits will be substantial. Based on calculations of the President's Council of Economic Advisors, the U.S. estimates that this agreement will provide the following cumulative benefits over four years. U.S. passengers will enjoy gains of about $1.2 billion (measuring the value to U.S. passengers of more service in a more competitive market); U.S. carriers will enjoy additional revenue of just over $4 billion (due, in part, to an increase in their market share); and U.S. exports of aviation services will enjoy a net increase of almost $4 billion (in each year, the U.S. trade surplus in this sector will be $1 billion higher than it otherwise would be).

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