Regulators on Friday approved a controversial merger between...
Regulators on Friday approved a controversial merger between Japan Airlines and Japan Air System, the country's largest and third largest carriers respectively.
The merger will create the world's third largest airline by revenue with a forty eight per cent share of the domestic market.
The go ahead from the Fair Trade Commission came after the two carriers submitted a revised merger plan to address competition concerns in the domestic market raised by the regulator in March.
JAL and JAS offered to give up nine landing slots at Haneda, Tokyo's domestic airport, lower domestic fares by ten per cent for the next three years, and also promise further discounts on other routes.
The FTC said that the landing slots would be redistributed to new entry carriers to promote competition.
The fare cuts would give gains from the merger to consumers and prevent possible collusion to raise prices as the number of large domestic carriers is reduced from three to only two.
Analysts said that a price reduction would hit revenues of all three carriers, but particularly those of rival All Nippon Airways, as the airline earns ninety per cent of its revenues from the domestic market.
There have also been concerns that a fall in domestic fares may discourage the entry of new carriers, which compete mainly on discount tickets, and stifle already limited competition.