U.S. limits Hawaiian Airlines and JAL’s planned partnership

Hawaiian Airlines and Japan Airlines have big plans to work together across the Pacific, easing travel between Hawaii and Japan for passengers.

Those plans deflated a little Thursday following the U.S. Department of Transportation's tentative ruling on the partnership. While giving Hawaiian and JAL a nod to cooperate more, the regulator did not grant them immunity to do things like coordinate fares or schedules.

Hawaiian and JAL are free to expand their codeshare agreement and to make other passenger-friendly moves, such as expanding reciprocal frequent-flyer benefits and optimizing schedules for connections both over Honolulu (HNL) and Tokyo Haneda (HND), the DOT said.

Related: Hawaiian and JAL Want to Form a Joint Venture

However, the airlines remain hamstrung by U.S. antitrust laws under the decision. This means they cannot coordinate fares or jointly schedule flights in markets where they overlap, like between Honolulu and Tokyo Narita (NRT).

Immunity "is not necessary for [Hawaiian and JAL] to deliver substantial new [public] benefits," wrote Joel Szabat, assistant secretary of aviation and international affairs at the DOT, in the tentative finding.

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Szabat cited, among other things, Hawaiian's IT systems that have "limited capability to allow for seamless ticketing and reservations with partners." The airline could have a difficult time implementing an immunized pact with JAL without a more robust technology platform, he added.

"The tentative decision... overlooks the importance of antitrust immunity that major global airline alliances already enjoy, harming a small U.S. carrier like Hawaiian by preventing it from being able to compete on equal footing and offer more competitive choices to travelers between Hawaii, Japan and beyond," said Hawaiian in a statement. The airline added that they plan to emphasize the benefits of immunity in their response.

Brent Overbeek, vice-president of revenue management and network planning at the airline, told TPG in September that Hawaiian was excited to move forward with its proposed JAL partnership. The tie up would allow the U.S. carrier more access to Japan, particularly domestic points that it does not serve, to expand its footprint in the large market.

Related: Hawaiian Airlines wants to be bigger in Japan with JAL partnership

"So much of [domestic] Japan flying is concentrated in Haneda, having access to that is really, really important to us," he told attendees at the World Routes conference in Australia.

Hawaii is the top destination for Japanese visitors to the U.S. The islands saw 1.6 million Japanese visitors in 2018, a number second only to Americans, according to the state's department of tourism.

Hawaiian is set to begin a third daily flight to Haneda in March. The new frequency will be timed to provide better connections to JAL's domestic flights from the airport, Overbeek said.

Hawaiian and others have 30 days to respond to the DOT's preliminary decision, after which the regulator can either revise it or issue a final ruling.

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