This article from NYTimes.com has been sent to you by psa188@juno.com. /-------------------- advertisement -----------------------\ Presenting the reloadable Starbucks Card. The Starbucks Card is reloadable from $5 - $500. Fill it up. Use it. Use it. Then, fill it up again. https://www.starbucks.com/shop/reload.asp?ci=672 \----------------------------------------------------------/ Regulators Raising Questions on Airline Merger in Japan March 20, 2002 By KEN BELSON TOKYO, March 19 - The proposed merger between Japan Airlines and Japan Air System, which would create one of the world's largest airlines by sales, has been repeatedly criticized by regulators on antitrust grounds. That is a highly unusual development in a country where the government is much more prone to rubber-stamp corporate mergers than to question them. The latest criticism came from the transport minister, Chikage Ogi, who said today that the two airlines should consider whether their merger benefits consumers and should alter their plans accordingly. On Monday, officials of her ministry said that smaller airlines would get priority for takeoff and landing slots at Haneda Airport, which serves domestic flights to and from Tokyo and is the nation's busiest, when the government reviews slot assignments. Last Friday, the Fair Trade Commission said the planned merger might deter small airlines from competing in a domestic market that handles more than 90 million passengers a year. Japan Airlines responded to the criticisms by saying it would look into the commission's comments but that the plan to form a joint holding company with Japan Air System by October would continue on schedule. The operations of the two carriers are expected to combine by 2004. Together, they will control almost half the domestic Japanese market, roughly on a par with All Nippon Airways, now the dominant domestic airline and No. 2 over all. That leaves little room for smaller airlines like Skymark and Air Do, which are struggling to compete even when they underprice the big carriers on major routes, analysts said. Complicating matters, Air Do is backed by the local government in Hokkaido, the northernmost of Japan's four main islands. Executives at All Nippon have also criticized the merger. "The domestic airline market is very political," said Otsuke Itazaki, an analyst at Credit Suisse First Boston in Tokyo. "A lot of people say it's strange that even after air fares were deregulated the three main airlines still charge the same rates." Still, it is unclear whether the flurry of official public attention to the merger's implications amount to political grandstanding or represent a serious attempt to scuttle or reshape the proposed deal. The government clearly wants to scotch criticism of the Fair Trade Commission as toothless. It plans to double the commission's size and increase the ceiling on fines the commission can levy. "It's said that the F.T.C. is more bark than bite, so we need to strengthen it," said Yoshimasa Hayashi, a ruling Liberal Democratic Party politician and a leader of the government's committee on administrative reform. The most likely outcome, some analysts said, is a compromise in which Japan Airlines and Japan Air System cede some landing slots on a few of their profitable routes to smaller competitors in exchange for permission to proceed with the merger. http://www.nytimes.com/2002/03/20/business/worldbusiness/20YEN.html?ex=1017640975&ei=1&en=049273d819c3bcc9 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company