The last chairman of the Civil Aeronautics Board and a former undersecretary of State argued yesterday against allowing a new Japanese cargo airline to fly the lucrative trans-Pacific route.
Dan McKinnon, who headed the CAB when it was dissolved Dec. 31, told an International Trade Commission investigating competition for air and sea shipments between the United States and Japan that U.S. negotiators should "hang tough" on Japanese demands for more air rights until previous commitments are met.
Richard N. Cooper, a Harvard University professor who was undersecretary of State for economic affairs from 1977 to 1981, attacked the corporate makeup of the new airline, Nippon Cargo Airlines (NCA), in which six major Japanese shipping companies, the largest trading companies and 19 freight forwarders hold majority ownership. He said this would lead to discrimination against Flying Tiger, the major U.S. cargo carrier.
Japan had requested that NCA be given rights to fly the U.S.-Japanese route starting April 1, but the case has been caught in the current trade frictions between the two countries.
While the State Department and the Department of Transportation are pressing for quick agreement for a plan they negotiated, the Commerce and Treasury departments and the Office of the U.S. Trade Representative persuaded a Cabinet-level committee to delay any decision on the Japanese request.
It is unclear, however, whether the decision will be delayed until June, when the ITC is due to issue a report. The investigation was ordered by outgoing U.S. Trade Representative William E. Brock, who asked the ITC to focus on the competitive aspects of NCA's corporate makeup.
"The ownership of NCA . . . suggests such strong commercial ties between those who buy air cargo services and the new carrier as to be antithetical to competition in international aviation," said Cooper, who testified on behalf of Flying Tiger.
He added that the Japanese government opposed licensing a new cargo airline until it won agreement that "NCA's success would not be built at the expense" of Japan Air Lines JAL , which is 37 percent government owned.
As a result, Cooper said, NCA would carve its market share at the expense of Flying Tiger and the other U.S. carriers. At present, he told the ITC, the air cargo market is about equally held by U.S. and Japanese carriers.
McKinnon, whose views mirrored the Flying Tiger position although he testified as an independent expert, said Japan puts "regulatory barnacles" on foreign airlines and that NCA should not be given any landing rights in the United States until outstanding problems from past agreements are solved.
As one example, he cited unforeseen limits that Japan placed on U.S. charter flights after a 1982 agreement was negotiated. These have served to keep U.S. airlines from using the agreement while JAL runs a full range of charters, he said.
McKinnon said an arrangement that gives NCA landing rights in the United States will hurt U.S. interests in the short run, and he doubts there will be any American gains in the long term.
The Japanese, who did not appear at the ITC hearing, have argued that the airline treaty between the two countries allows them to have an additional cargo carrier. U.S. officials, however, point to a five-year delay before Japan would give United Air Lines permission to fly to its country.