United Airlines said yesterday that it will not begin flying Pan American World Airways' Pacific routes on Tuesday because talks have been suspended between the U.S. and Japanese governments on the subject of landing rights in Tokyo.
Negotiators met here over the holiday weekend, then adjourned without scheduling new meetings. United has purchased Pan Am's Pacific routes, plus planes and employes, for $715.5 million, but the deal will not be final until landing rights in Tokyo are granted by the Japanese government.
The United States says it has the unquestioned treaty right to designate which U.S. airlines will serve Tokyo and that it is transferring its designation from Pan Am to United.
Japan is attempting to link landing rights for United with other aviation issues, primarily increased access to the United States for Japan's cargo carrier, Nippon Cargo Airlines (NCA), currently limited to six flights a week.
An expansion for NCA, of course, would be bad news for Flying Tiger Line Inc., the major U.S. cargo carrier to Japan, although Japan Air Lines is the leading carrier in both passengers and cargo across the Pacific.
United's official reaction was diplomatic. "We are disappointed in the outcome of the talks to date," said James J. Hartigan, United's president and chief executive officer. "We remain hopeful, however, that the two governments will seek a speedy resolution to the landing rights issue." He said that United can replace Pan Am "on short notice," but has not set a new date.
Cyril Murphy, a vice president at Flying Tiger, was less restrained. "Our basic concern would be that we get caught in the middle of this thing," he said. "There are two scenarios we see developing. One scenario is that the United States caves in to Japanese pressure and pays for the privilege to replace Pan Am with United. . . . We become the one who pays the price.
"The other scenario is that the United States decides to hold firm, goes to a retaliatory mode, imposes sanctions, and the Japanese retaliate in turn against Flying Tiger. . . . When it gets into a mode where we have to pay for it or suffer, we could be an innocent bystander."
The ultimate U.S. retaliation would be to suspend Japanese landing rights in the United States, something U.S. sources have said they are prepared to do if necessary, albeit reluctantly. "Once you go that way, everybody gets hurt" and the resolution is complicated, a U.S. source said.
Matthew V. Scocozza, assistant Transportation secretary for policy and international affairs, said, "We've made it clear that there is no tie [between United's landing rights and other issues] . . . I can't say I'm optimistic, but I'm not pessimistic." On the optimistic front, Scocozza said, "Japan has not said, 'No' " to the U.S. request that United be granted the landing rights.
Flying Tiger's Murphy said, "If I had to have my druthers, I'd just as soon the U.S. stand firm on the principle, because if it caves in, not only does it set a precedent, but once they make a payment, that payment goes on forever."