[Congressional Record Volume 143, Number 124 (Wednesday, September 17, 1997)]
[House]
[Pages H7496-H7502]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1815
AIR SERVICE NEGOTIATIONS BETWEEN UNITED STATES AND JAPAN
The SPEAKER pro tempore (Mr. Cooksey). Under the Speaker's announced
policy of January 7, 1997, the gentleman from Illinois [Mr. Hastert] is
recognized for 60 minutes as the designee of the majority leader.
Mr. HASTERT. Mr. Speaker, I am going to share some time with my good
friend from the other side of the aisle, but before I do that, I have
seen the previous speakers here kind of quote figures on the other side
of the aisle and say that some folks do not believe in public
education.
I have to tell my colleagues, I am a product of public education. I
taught in the public schools for 16 years. I think one of the real
issues that these folks missed in this presentation was that people
want to make choices for their kids, and I do not think that it is
something that we want to decide in bureaucratic offices in Washington,
how our kids should be taught, how our money should be spent.
One of the things that we think might be a good idea is to send our
money back to where those local schools are and let those local school
boards and those local folks who run schools and State organizations
decide what is best for those kids in those areas.
One other thing. I heard people talking on the other side of the
aisle, saying we want to deflate school because of vouchers. Vouchers
give parents a choice, and if public schools are lacking, it is not up
to the Congress to give people the confidence in the public schools. It
is the public schools themselves that have to build confidence so that
parents believe that their children are getting a good education, that
they have the opportunities, and when they graduate from that school
they are going to have the same opportunities somebody else has.
So I would join with my friends on the other side of the aisle who
just gave this presentation, yes, I think public schools are important,
but I think parents ought to have choice and I think vouchers ought to
be part of that decision. If a parent wants to send a child to a
school, he ought to have the choice to do that. So I would say that
there is room maybe for more bipartisanship than just the presentation
we just saw.
One of the reasons that I have asked for this time tonight is to
discuss really an area of economics, far away from education, but to
educate people about what is going on in this country especially with
competition of major airlines, and competition with a country that has
sometimes been a bitter competitor for us, and that is Japan.
Japan entered into an agreement in 1952 that basically limited
airline transportation between the United States and Japan between four
airlines, two of those airlines from Japan and two airlines from the
United States. One of those airlines from the United States has
subsequently gone out of business. The other airline has been enjoying
most of the air routes between the United States and Japan over the
last almost 40 years plus, and as a consequence, the old story, at
least out in the countryside where I am from in rural Illinois, about
the farmer standing out in his field and somebody coming and saying,
``How do you get to Wright's Corners?'' And the old farmer scratches
his head and says, ``Son, you can't get there from here.''
That is a problem, especially in the Midwest. If one wants to fly to
Japan from some place like Chicago or Indianapolis or St. Louis or
Kansas City or even Atlanta, GA, one cannot get there from there. So
what we are saying is there ought to be a change.
What is happening today, there are discussions, high-level
discussions between the United States and Japan on changing the way
that we put in the regulation on air traffic between the United States,
the number of flights between the United States and Japan. The airline
who has the sole, not the sole monopoly but a major monopoly of air
traffic between the United States and Japan, the American carrier says,
well, it is open skies or nothing. In other words, absolutely free
regulation, or we stay the same way.
Well, probably we are not going to get to open skies, or at least
immediately. Open skies is certainly something that we would like to
have, open competition. Open competition means that if one is going to
fly as a business trip from Chicago to Tokyo or Chicago to Osaka,
instead of paying $4,000 a ticket we may pay less than $3,000 a ticket.
That means more people can go, more competition. We have a better
infrastructure, interface in business and economic relationships
between this country and Japan, and Lord knows we could use that.
However, what happens when we limit the number of flights, especially
from the interior of this country, we just cannot get there, so one has
to take a train or take another flight to Los Angeles where there are
80-some flights a week, or one has to go to Seattle or San Francisco,
or one has to fly to the east coast to get a flight to the Far East,
which means one would have to go west.
So it is an issue of fairness. We need to open the skies. We need to
have these negotiations take place, but it cannot be all or nothing.
What we are looking for is the ability for us to start to open the
doors, to allow a place like O'Hare Field, which has one of the largest
airfields, at least in capacity and the number of flights that happen
in this country. It is No. 1 in this country for domestic passengers,
flights in and out and the number of passengers, but we are 30th in the
number of trips overseas. So what does that mean? That means that we
have less visitors coming from Japan.
If we just had one more flight per day, whether it is a Japanese
carrier or an American carrier, out of the Midwest, out of Chicago, an
average visitor from Japan spends about $1,500 while they are a guest
in this country for a week or 10 days. If we had one more flight a day,
that would mean over a year's time we would have almost $15 million
more business.
When we start to talk about trying to balance the trade between the
United States and Japan, we send a lot of dollars to Japan. We have a
lot of Japanese sound equipment and electronic equipment and
automobiles. The best thing we can do is try to bring some of those
dollars back, and the best way we can capture those dollars is having
Japanese tourists come back not just to Washington, DC or New York City
or Los Angeles, but yes, to the Midwest and to the South as well.
If we start to open up airline availability so that those people can
fly into the Midwest and the mid-South, then we could start to get more
people involved, we can start to bring more dollars from Japan here,
and certainly even start to balance that imbalance in trade.
One of my colleagues who serves on the Committee on Transportation
and Infrastructure and is involved in airline jurisdiction is my good
friend from the other side of the aisle, the gentleman from Illinois
[Mr. Lipinski]. I would like to yield to the gentleman at this time and
hear his comments.
Mr. LIPINSKI. Mr. Speaker, I thank the gentleman. It is an honor for
me to participate in this special order with the gentleman, but before
I get into my comments, I would appreciate it very much if my colleague
would yield to a fellow Chicagoan, the gentleman also from Illinois
[Mr. Davis] on this subject.
Mr. HASTERT. Mr. Speaker, it would be my honor.
Mr. DAVIS of Illinois. Mr. Speaker, I thank the gentleman. I
certainly want to thank my colleagues for putting together this
opportunity to talk about the needs of the Midwest.
I rise today to join my Illinois colleagues in urging the Clinton
administration and the Japanese Government to use this historic
opportunity to put an end to the limits on direct air service between
Chicago's O'Hare International Airport and Asia. It is imperative that
current negotiations with
[[Page H7497]]
Japan yield an air service policy that will benefit Midwest businesses
and consumers.
Liberalization of Midwest air service is an important first step in
ensuring real economic gains to our region which has been historically
disadvantaged by current air service agreements. It is time for the
Midwest to receive its fair share of access to the growing Asia
markets.
Under current air service agreements, Chicago's O'Hare, the hub of
the Midwest and one of the most frequently-used air terminals in the
world, is restricted to only 20 weekly direct flights to and from
Tokyo, the gateway to Asia. This is not adequate service for the
thousands of midwesterners who do business with companies in Asia.
Four of Illinois's top 10 export markets are in Asia and account for
more than $6 million in annual revenue. A new agreement would have
enormous economic potential for our region, and would enable the
Midwest to be more competitive in the largest and fastest growing
economic market in the world.
In fact, it is estimated that lifting current restrictions could
bring as many as 2,670 new jobs to the Midwest, 1,820 of those in
Illinois alone. Expanding current service of trans-Pacific flights will
also provide additional access to the Midwest region for foreign
businesses wishing to invest in our region. Unless these restrictions
are lifted, the Midwest stands to lose up to $1 billion in Japanese
investments in property, plants, and equipment.
It is unfair to require our airline industry to operate under an
antiquated post-World War II agreement which only granted limited air
service rights to Asia for certain United States cities. As a result of
this agreement, flights to and from Chicago are severely restricted.
These outdated regulations do not realize the global economic
dependency on efficient air service, nor the state-of-the-art
technology of today's airline industry. Furthermore, a new agreement
must provide for increased hub-to-hub connections which could provide
lower fares for consumers. These reduced fares could generate about $16
billion a year in tourism revenue for the Midwest region.
Mr. Speaker, the Midwest must not be forced to compete in today's
global economy while operating under an antiquated air service
agreement. Therefore, I, along with my colleagues, urge the Clinton
administration to reach an agreement and the Japanese government to
reach an agreement which would increase Midwest-Asia air service. These
negotiations offer an unprecedented opportunity to not only expand
tourism, increase employment and economic growth for the Midwest
region, but to open up enormous opportunities not only in the Midwest
but in other major areas throughout the country.
So I thank the gentleman from Illinois [Mr. Hastert] for giving me
the opportunity to share my thoughts and ideas on this subject.
Mr. HASTERT. Mr. Speaker, I thank the gentleman from Chicago, a good
friend and certainly a supporter of economic development, not only in
Illinois and Chicago, but also the Midwest.
It is interesting, his comments. If I wanted to fly from Chicago or
Atlanta or New Orleans or St. Louis and the few flights there are, the
one flight a day or two flights a day that fly out of Chicago, if I
cannot get on one of those flights, that means that I have to fly to
San Francisco or Los Angeles or maybe Seattle, but probably from the
West, either San Francisco or Los Angeles. All of those are nice towns,
but it means one is going to sit around that airport for 2 or 3 hours
extra before one gets on his flight or makes his connection, and the
cost of that flight is probably going to be $1,000 or $1,500 or $2,000
more than if there was open competition, if we let airlines fly in and
out and let the marketplace decide what those prices are.
So not only are we hindering the convenience of people to move from
the Midwest and mid-South to the Far East, but we are also saying it is
going to cost more money, by the way, and we are not going to let that
free competition in.
On September 22 of this year there is that meeting in Japan, in
Tokyo, and it is important for our administration and the Japanese
Government to try to come to an agreement or an accord. It also means
one other thing.
{time} 1830
It means if we want to do business, we have to open that business up.
We just cannot constrain that business to one airline that gets the
majority of it.
Mr. LIPINSKI. Mr. Speaker, will the gentleman yield?
Mr. HASTERT. I yield to the gentleman from Illinois.
Mr. LIPINSKI. Mr. Speaker, I thank the gentleman for yielding to me.
I have some prepared remarks in regard to this subject. It is a subject
that is enormously important not only to Chicago, IL, the Midwest, but
I believe to the entire Nation. Aviation is not only the future, but
aviation is the present and will be the future. It is something that we
have to be involved in, involved in deeply, and we have to really have
it be one of the vanguards of our economy.
The bilateral agreement between the United States and Japan was
signed in 1952, over 45 years ago. The agreement gave three airlines
the right to fly to Japan and beyond to other points in Asia. The three
airlines are Northwest, United, which purchased its rights from Pan
American, and Federal Express, which purchased its rights from the
Flying Tigers.
Federal Express, as we all know, is not a passenger-carrying airline,
it is a cargo airline. So actually, these two airlines, Northwest and
United, are considered incumbent carriers. Since 1952 the United States
and Japan have signed memoranda of understanding granting additional
carriers such as American, Delta, Continental, and UPS limited rights
to serve Japan. Once again, UPS is not a passenger carrier, but a cargo
carrier, so the three additional passenger carriers we have gotten into
Japan under a memorandum of understanding are American, Delta,
Continental.
These MOU carriers, as they are referred to, fly to and from Japan,
but with frequency, capacity, and gateway limitations, and with no
beyond rights, which means they can fly into Tokyo, but they cannot fly
beyond Tokyo. No other place in Asia can they fly to. They have to
return immediately to the United States.
There have been several aviation disputes between the United States
and Japan in recent years. Most of the tension has stemmed from Japan's
protectionist restrictions on its market. Japan has steadfastly refused
to open its international markets in order to protect its national
carriers.
Japan fears that its national carriers cannot compete successfully
against the larger, more efficient U.S. carriers in an open skies
market. However, for the first time in decades, Japanese negotiators
have indicated a willingness to be flexible in regard to increased
access for U.S. carriers.
The United States must seize upon this rare opportunity to ease the
restrictions in the U.S.-Japan aviation market. Obviously, an open
skies agreement should be our ultimate goal. However, Japan is adamant
in its opposition to open skies. Therefore, we should work on a
bilateral agreement that will ease current restrictions in the market
and will eventually lead to open skies. It is either a phased-in
approach to open skies, or to status quo. The status quo will only keep
Chicago and the Midwest isolated from Japan, causing our region to
continue to lose a million dollars in missed opportunities.
Right now only two carriers are incumbent carriers. One is a United
States carrier, Northwest, and the other a Japanese, JAL, can operate
from their primary hub airport without any frequency restrictions.
United, although it is considered an incumbent carrier, is restricted
to only six flights per week from its principal hub at O'Hare
International Airport.
Let me run that by the Members once again. Right now, only two
incumbent carriers, one a U.S. carrier, Northwest, and the other a
Japanese carrier, JAL, can operate from their primary hub airports
without frequency restrictions. United, although it is considered an
incumbent carrier, is restricted to only six flights per week from its
principal hub at O'Hare International Airport. American, which also
hubs at Chicago-O'Hare, is completely shut out of the Chicago-Tokyo
market.
[[Page H7498]]
Japan wants its other national carrier, ANA, to also have unlimited
access between the United States and Japan from its major hubs. This is
one of Japan's primary goals in negotiating a new agreement. In fact,
as far as I am concerned, it is their number one goal in negotiating a
new agreement. The United States should only grant ANA unlimited access
normally reserved for incumbent carriers if Japan guarantees that a
second U.S. carrier will also enjoy all the rights of an incumbent
carrier. Then, with two carriers from each country having unlimited
access, each community could potentially be served by four different
carriers.
However, if JAL and ANA, Japan's only two international carriers,
both have unlimited access between the U.S. and Japan, the nonincumbent
U.S. carriers would be at a great disadvantage. Therefore, increased
frequencies and additional gateways are needed for MOU carriers so they
can also provide service from their major hub airports. U.S.
negotiators should not grant ANA incumbent status without also gaining
increased access for U.S.A. MOU carriers.
Finally, a phased-in approach to open skies with Japan should
definitely allow code-sharing between all United States carriers and
Japanese carriers. The aviation industry is moving in a definite
direction of abandoning attempting to have beyond rights to relying
upon code-sharing networks. Code-sharing networks allow U.S. carriers
to offer the service and convenience of a foreign hub without the
expense of a self-operating hub.
For example, code-sharing agreements have enabled U.S. carriers to be
effectively competitive all over Europe. In fact, all U.S. carriers now
rely on code-sharing alliances with one or more European carrier to
feed passengers to and from their transatlantic flights. Unfortunately,
under the current bilateral with Japan, code-sharing alliances are not
permitted, and as a consequence, U.S. incumbent carriers depend solely
on their limited beyond rights to provide service beyond their Japanese
hubs.
Code-sharing agreements between U.S. and Japanese carriers would
provide the service and the access to Japan and beyond that we want for
Chicago, the Midwest, the East, and the South. In Japan's Tokyo Narita
airport, that is the primary gateway to the rest of Asia. However,
available space is severely constrained there. The best use of the
limited space at Narita would result from a code-sharing agreement
between a U.S. carrier and a Japanese carrier.
For example, if an airline has 100 markets beyond its United States
hub and no hub in Tokyo, 100 markets are served. But if an airline has
a code-sharing agreement with a carrier with a hub on the other side of
the Pacific, with 100 American markets beyond the U.S. hub and six
Japanese markets beyond the Tokyo hub, over 600 city pairs can be
served.
With O'Hare's position as a hub for both United and American, any
service from Chicago O'Hare to Tokyo Narita would provide the greatest
number of potential city pairs, representing the best use of limited
space at both airports. Code-sharing agreements do not equal open
skies, but they do open the market tremendously, increasing access to
Japan and beyond.
In addition, once code-sharing agreements are in place, Japanese
carriers will want antitrust immunity to maximize the effectiveness of
their code-sharing alliances. The Government of the United States does
not and will not grant an alliance between a U.S. and a foreign carrier
for antitrust immunity until open skies are achieved between the two
nations.
Therefore, it is easy to see how our liberalized agreement now will
lead to open skies with Japan in the future. Again, a phased-in
approach to open skies is much better than the status quo. If the
United States does not seize this opportunity with Japan's willingness
to be flexible by the end of the month, we will be stuck with limited
access to Japan and beyond, and Chicago and the Midwest will continue
to be big, big losers.
I thank the gentleman from Illinois [Mr. Hastert] for this time.
There are a number of other people here to speak. I will be back in the
future.
Mr. HASTERT. Mr. Speaker, I thank the gentleman from Chicago. One of
the things, just in a practical application of what the gentleman said,
for instance, if I wanted to take a trip to Chicago's sister city,
which happens to be Osaka, Japan, a small city in Japan, only about 15
million people in its greater Kansai area, we could not go directly
from Chicago to the new airport outside of Osaka.
So what we would have to do, we would have to fly to Tokyo, and
because there are not any rights for American carriers to go beyond
Tokyo. We would have to fly some other airline from Tokyo to Osaka, and
hope that maybe if we wanted to fly from Osaka back to the United
States you could do that, but you could not fly direct to Chicago, you
would have to fly to Los Angeles, then wait and change planes, and fly
from Los Angeles back to Chicago.
Not only does it complicate the ability to do business or to travel
or to make exchanges between these two countries, it makes it virtually
impossible for people to have free and easy travel plans.
I appreciate the comments of the gentleman from Chicago.
Mr. LIPINSKI. Mr. Speaker, I would just like to say that we all know
that the Japanese are extremely difficult people to deal with on all
trade issues. One of the reasons for that is because it is a very small
island. They are very much people who like to deal with themselves, and
if they are actually willing to give us an opportunity to get in there
and open up that market in some way, we should certainly take advantage
of it.
Mr. HASTERT. I appreciate that, Mr. Speaker. Any time we sit down and
deal with trade, we have to sit down honestly and hope that the parties
on the other side of the table sit down honestly and try to bargain.
Each side will always try to get their best deal.
Mr. Speaker, it is my great privilege to yield to the gentleman from
Peoria, Illinois [Mr. LaHood].
Mr. LaHOOD. Mr. Speaker, I thank the gentleman for allowing me to
offer a few comments regarding this important issue that the gentleman
has taken time to set aside this hour for to discuss. I have some
prepared remarks that I would like to make, and as a member of the
Subcommittee on Aviation of the Committee on Transportation and
Infrastructure, our committee has discussed this issue, and there is an
awful lot of concern about it.
In 1952, the United States and Japan entered into a highly
restrictive aviation agreement that to this day severely restricts the
number of flights between O'Hare International Airport in Chicago and
Japan. Despite being the busiest airport in the world, O'Hare ranks
only 30th in terms of the international passenger travel. This makes no
sense at all. Because of this restrictive 1952 agreement, all of the
Midwest and the entire country have been hurt by the lost business
opportunities.
Fortunately, the U.S. and Japan are currently negotiating an
agreement that would drastically increase the number of flights to
Japan and all of Asia. The potential economic impact of this agreement
cannot be overestimated. An independent study by Arthur Andersen has
concluded that lifting the current restrictions would increase
passenger travel between Chicago and Tokyo to more than 700,000 by the
year 2000, bring in over 2,600 jobs to the Midwest, and result in an
additional $80 million in spending throughout the region.
I might add that the Midwest-Asia Aviation Coalition has stepped in
to provide important leadership in this effort. This coalition is made
up of a diverse group of business, trade associations, labor and civic
organizations, and tourism groups.
{time} 1845
Additionally, this group includes a very distinguished list of over
290 individuals, including Gov. Jim Edgar of Illinois, Mayor Richard
Daley of Chicago, and our former Republican leader Bob Michel.
I have no doubt that through the efforts of the Midwest-Asia
Coalition and others, that when the final negotiations are completed,
we will all soon realize the tremendous benefit of this new aviation
agreement. Again I wish to thank my friend the gentleman from Illinois
[Mr. Hastert], and all of the Members who are contributing so much in
this issue that we are discussing this evening.
[[Page H7499]]
Mr. HASTERT. Mr. Speaker, I thank the gentleman from Peoria, and at
this time I would like to introduce and yield to the gentleman from
southern Illinois [Mr. Poshard].
Mr. POSHARD. Mr. Speaker, I thank the gentleman for yielding to me.
This is a very important issue to the State of Illinois, because in
just a few days the Clinton administration and the Japanese Government
will meet again to discuss the United States-Japan Passenger Air
Service Agreement. This time I hope we do the right thing.
It is time, indeed it is past time, to reach an agreement that will
expand service between the two countries and beyond. The United States-
Japan aviation agreement is, to some extent, a relic. It was reached in
1952, an era before jet service and before extensive commercial air
travel between the two countries began.
At the time, Japan was a weak economy, still recovering from World
War II. Because it was a different era, with different circumstances,
the two sides agreed on an aviation agreement that fit those times, but
not today. The agreement they reached then, which has largely stood
through the years, severely limits flights between the two countries.
Cities and airports were handpicked by governments, not the markets.
In recent years, the agreement has been loosened a tiny bit, yet
there is nothing close to open access or a free market. The result is
that only 11 United States mainland cities, only 11 cities, are allowed
to have flights to Japan. Currently, Chicago's O'Hare Airport is the
busiest airport in the world, yet ranks only 30th in terms of
international travel. One of the reasons for this is that access to
Japan is severely limited from Chicago, totaling only 20 flights per
week. Meanwhile, Los Angeles has 87 flights per week to Japan.
Moreover, the west coast has 160 weekly flights to Japan, while the
central part of the country has only 59. What this means is that most
residents in the Midwest and the East, where three-fifths of our
population reside, are not conveniently located for air travel to
Japan. This problem begs to be corrected when we consider that the
Arctic Circle flight path from Chicago to Japan is the most efficient
route for this trip.
This is not the free market at work. In my State of Illinois, logic
and economics demand that Chicago have more flights. Economic research
by Coopers & Lybrand indicates that adding just seven round trip
flights per week between Chicago and Osaka would bring traffic totaling
60,000 to 70,000 people a year, and this would bring in as much as $503
million a year to the economy.
The U.S. airline industry, except for one airline, has lined up
behind the push for more service. Northwest, which currently has a
dominant share of the United States-Japan market, has taken a stance
that backs stagnation and the status quo. They might be serving their
interests but not the interests of people who live in my State and
could benefit from the expanded service.
A new expanded agreement with Japan would produce an additional 3,600
new flights a year in the United States-Japan market, more additional
flights than any of the 25 so-called open skies agreements that the
United States has signed in the past 2 years.
There is more. A new agreement would produce a 25-percent increase in
competition by adding new airlines and increasing the number of cities
in the United States that could gain service. All that would produce
more than $10.8 billion in annual economic activity, which would
support nearly 250,000 U.S. jobs across this Nation.
Mr. Speaker, we should push ahead with a new United States-Japan
Passenger Air Service Agreement. A new agreement would produce more
flights by more airlines to more cities between the United States and
Japan and beyond. That is real competition and it benefits all of us.
Mr. Speaker, I wish to thank the gentleman from Illinois for giving
me this time and opportunity on this very important issue facing our
State.
Mr. HASTERT. Mr. Speaker, I thank the gentleman from Illinois, and he
brings up some very interesting statistics. One of the things I want to
share with my fine colleague from southern Illinois is that he said if
we open up one flight a day between Chicago and Osaka, and of course,
Osaka is Chicago's sister city, that we affect some 700,000 people.
But what we really do is increase the economy, Japanese yen flowing
to the United States and the Midwest. And of course, we know we have
that trade deficit, so the more dollars we can get, the better off we
are. But just by opening this up, a half billion dollars just to
Illinois, not counting what would happen in Texas and Louisiana and
Georgia and other places.
I think that is just an amazing piece of information, and I really
appreciate the gentleman's effort.
Now, Mr. Speaker, I wish to yield to the gentleman from Texas [Mr.
Sessions].
Mr. SESSIONS. Mr. Speaker, I thank the gentleman from Illinois [Mr.
Hastert]. I appreciate this opportunity to speak about this very
important subject, and I rise to offer my support also to the United
States and Japan negotiating team who are now entering the next rounds
of meetings to continue talks on the long-awaited air transport
agreement between our two countries.
I think history will look at this moment as one that is a very
important crossroads in the future of both our countries and our
nations as we work together, not only now but in the future.
For the first time in almost 50 years, the United States and Japan
will come together and agree to a new level of passenger air service
between the United States, Japan and beyond. What is even more
significant, though, is the economic impact that that will accord and
the opportunities that will surely follow in the coming years.
This agreement will provide United States air carriers with a 25-
percent increase in passenger flights to Japan. Nearly 3,600 new
flights will be added each year. Further expansion can be expected as
other carriers begin this service to the region, which I believe can
only breed more competition in the marketplace. And the best part is
that is only the beginning.
This agreement will have an enormous economic impact to our economy.
At present it is estimated that this agreement will generate almost
$10.8 billion in direct and indirect economic impact. More importantly,
this accord will open additional routes for United States carriers in
growing Asian markets and certainly beyond Japan. That factor alone
could inflate an additional $1.6 billion for U.S. air carriers.
Clearly the biggest gain in this agreement can be felt in access to
markets for American business men and women. The unprecedented increase
in commercial and passenger air traffic will open a new day for each
and every one of our business men and women as they wish to do business
in Asian export sectors. We cannot underestimate the power that these
new emerging markets will bring and the opportunities that are before
us.
Likewise, these increased opportunities will enhance Japanese
investments in our country. The anticipated increase in cargo and
tourism and traffic will enhance our own marketplaces and our economy.
The possibilities are almost endless for a person from Texas to think
about. Not only will it help our economy and our country, but it will
bring new and expanded tourism to Texas and the United States.
In closing, I would like to say that I agree with what has been
stated here today; it is the marketplace, it is economics at its very
best, and it is economic development. And I would like to thank my
colleagues from Illinois, and in particular [Mr. Hastert] for taking
the time to discuss this important development and support for our
negotiators as they enter into these important agreements.
Mr. HASTERT. Mr. Speaker, I thank the gentleman from Texas. And when
we talk about what happens and, of course both United and American tend
to hub and do hub in Chicago, but American has a big hub in Texas, and
so the dynamics we talk about and how that brings economic activity
certainly to the Midwest, certainly happens in the Midwest, in the
Texas area and the Southwest, and certainly in the Mid-South.
Mr. SESSIONS. Of course it does. We have many, many people who have
come to our country with not only opportunities for their lives but
have
[[Page H7500]]
brought high-technology abilities to our country. They want to make
sure that we are selling our products overseas. They want to make sure
it is easy for us to do business. They do not want to have two or three
stops before they get to Japan.
So it is not only faster and better service, but it is a real boom as
we near the 21st century.
Mr. HASTERT. Another interesting thing the gentleman brings up, he
talks about a $10 billion increase in economic activities. That just
does not accrue to any one area in this country. It certainly accrues
across the board.
If cities, and especially important cities in Texas and important
cities in Illinois and Louisiana and other places, have the ability to
get involved and to partake in this, that certainly spreads out. Again,
as we talked about, it starts to level out that imbalance of trade that
we have.
I really appreciate the gentleman's participation and being here
tonight. And at this time, Mr. Speaker, I would like to introduce and
yield to one of the youngest members of the Illinois delegation but
certainly one of the hardest working, the gentleman from Chicago, IL
[Mr. Blagojevich].
Mr. BLAGOJEVICH. Well, Mr. Speaker, let me thank my colleague from
Illinois [Mr. Hastert], and I want to comment briefly, piggybacking on
some of my predecessors speaking here today, principally those from
Illinois, but also the gentleman from Texas [Mr. Sessions] and agree
with them that we need to urge the negotiators from the White House to
try to do what they can to free up our skies and make our skies more
available for American carriers to fly to Asia.
Closed skies are not friendly skies, they are unfriendly skies. It is
probably not realistic to think we are going to have completely open
skies, but it is important to realize we need to make an incremental
approach and to gradually open the skies and increase routes to Asia
from the United States.
Now, much has been said about the 1952 agreement that governs the
present rules that decide aircraft flights from the United States to
Asia. Let me put that in perspective, if I may. Back in 1952, there was
no rock and roll. That is how long ago this was. We were operating
under an agreement that is so dated rock and roll had not even existed
yet. Elvis was only a junior in high school when this was entered into.
Nobody in the NBA dunked back in 1952. Virtually everybody in the NBA
dunks.
These are changing times. We live in a changing world. The Baltimore
Orioles did not exist in 1952. I think my other colleague from Illinois
[Mr. Lipinski] is an expert on this. They were the St. Louis Browns, am
I right?
Mr. LIPINSKI. The gentleman is correct.
Mr. BLAGOJEVICH. I am right. So we have seen a great deal of change
not only in cultural and social developments but a great deal of change
in more important things, like technological changes and changes in
trade and the like.
{time} 1900
So we have seen a great deal of change in other societies, in fact in
the world, since 1952. We have an agreement that governs the policy
with regard to aircraft flights from the United States to Asia that was
agreed to in 1952, yet the world has seen a great deal of changes.
Technological changes have been rapid and continue to change with
every passing day. International trade is different today. In fact, the
Asian market back in 1952 is not the Asian market that exists in the
United States. Over the past two decades, U.S. foreign trade and
foreign investment with East Asia has soared, increasing faster than
economic ties with any other region.
Between 1978 and 1996, U.S. exports to East Asia grew 620 percent,
while during the same period U.S. exports to all of Europe increased by
around 246 percent. Back in 1952 Europe was the chief trading partner
with the United States. That is a fact that is no longer as relevant as
it once was.
In 1996 the value of total U.S. exports to Asia surpassed that of
exports to all of Europe. So Asia is a major, major place in the world
and is a very, very important region in the world with regard to United
States and our economic health and vitality.
Today Japan, for example, is the second largest international
destination for United States travelers after the United Kingdom. In
fact, by the year 2015 the Asian Pacific region is expected to
represent 40 percent of total air travel between North America and any
international destination, surpassing the volume of air travel between
North America and Europe.
So it seems to me we ought to scrap this 1952 agreement, bring it
into the modern era, and apply routes and have a more open sky so that
American carriers can reach Asia and American business can enjoy some
of the fruits and benefits of those expanding and emerging markets in
and throughout Asia.
With regard to technological changes, let me just point out that air
travel is different today in 1988 than it was in 1952, when most
aircraft flights came out of the West Coast because you could not fly
directly from New York to Japan or from New York to Tokyo back in 1952.
Forty-five years have transpired. Aviation technology has made it
possible to fly directly between Chicago and Japan.
In fact, between 1952 and 1998 we were actually able to fly to the
moon, which we did in 1969 for the first time. So there is a great deal
of technological change; and, therefore, this agreement needs to be
renegotiated so that it fits the times and the era in which we live.
There are advocates who believe we ought to have one or the other, we
ought to have only open skies or not change the 1952 agreement, and I
would submit that those advocates are either totally erroneous or
disingenuous.
The fact of the matter is that the Japanese Government has said
publicly that they will not entertain any discussions about completely
opening the skies. Therefore, I think it is important that we again try
to make incremental gains and slowly approach opening the skies so that
the Japanese Government becomes more comfortable with Japanese carriers
in more direct competition with American carriers, who would generally
have a better record of being able to succeed in a nonregulatory free
market environment.
So I hope we can have more flights to Asia. I hope more cities
throughout the United States can have more access to Asian flights, in
particular to Japan. I hope we can expand some of the buy-on rights
agreements, and I would urge the negotiators to continue in their
efforts in developing some of the co-chairing efforts that they have
been doing.
One final point. As we open access to American airports and access to
Asian and Japanese airports and air traffic, I would hope that the
Midwest is properly represented. And I would urge that we take a
serious look at Chicago, which has historically been a transportation
hub in the United States, with rail, with trucking, with air travel,
and with sea and lake travel.
Chicago historically has been the center of transportation. Chicago
O'Hare International Airport is among the busiest in the world. It has
a built-in infrastructure that would work perfectly with more flights
from Chicago directly to Japan. Chicago would also be able to service
other parts of the Midwest.
Three out of five Americans live east of the Mississippi River, yet
the region's airports can only offer one out of five weekly flights to
and from Japan. There are 87 flights per week between Los Angeles and
Asia. There are only 20 flights per week between Chicago and Asia.
As the gentleman from Illinois [Mr. Poshard] noted moments earlier,
there are 160 flights per week to and from Asia which originate from
the Western United States. There are only 59 flights per week to and
from Asia which originate from the Central United States.
So we should have more air travel from the Midwest United States and
Central United States to Asia. I would argue that since O'Hare Airport
is a perfect place to fly that has a built-in infrastructure, those
flights, many of them, should come out of Chicago's O'Hare
International Airport.
One last point, if I may. There are financial considerations, as
well. Fifteen different Japanese banks have branches in Chicago. So
when you consider the business aspect, it is very convenient for those
who want to do business from Chicago to Japan or Asia to be able to
[[Page H7501]]
fly directly from Chicago to Asia, and having more flights available I
think helps with regard to that. There are in fact more Japanese banks
and branches in Chicago than any other foreign banks and branches
represented in Chicago from other countries.
And one last thing. Chicago is the international leader in the
trading of commodities, stock options and currency. Chicago is the home
of five major exchanges. It makes perfect sense to have direct travel
from Chicago to Asia. As I close, 80 percent of the world's commodities
are traded through three of Chicago's exchanges.
So having said that, I hope the negotiators listen to what I hope are
words of wisdom. I know that whenever the gentleman from Illinois [Mr.
Hastert] speaks, those are words of wisdom, and I am less confident
about my own words.
Mr. HASTERT. I thank the gentleman from Illinois [Mr. Blagojevich].
Just, you left out the Chicago Bulls. I do not know how we did that.
Mr. BLAGOJEVICH. If the gentleman will yield, I do not want to be
parochial.
Mr. HASTERT. Mr. Speaker, I yield to the gentleman from Illinois [Mr.
Weller], who also represents Chicago and parts of down-State Illinois.
Mr. WELLER. I thank the gentleman from Illinois [Mr. Hastert], my
friend and the chief deputy whip and one the leaders in our House.
Also, I want to recognize the gentleman from Illinois [Mr. Lipinski],
who represents the neighboring district, for his leadership on aviation
issues. And of course, I echo the words of my friend, the gentleman
from Illinois [Mr. Blagojevich], on why improving aviation
opportunities, particularly the connections between the Midwest and the
United States and Japan, what it means in jobs for the folks in the
Chicago region, which I have the privilege of representing.
I believe it is time that we move forward with negotiations to
improve and open more skies to flights for American carriers,
particularly between Chicago and the Midwest and Japan.
Today, Chicago O'Hare is the world's busiest airport. We have quite
the privilege. Chicago is considered America's second city. It is a
global financial center. It is a world class city, and it is also home
to the world's busiest airport. More flights come in and out of
Chicago's airspace than any other place in the world.
But the surprising thing is that we rank 30th, Chicago O'Hare ranks
30th overall in international flights and international passengers. Now
if we were to change that and improve opportunities for American
carriers to fly between Chicago and Japan, it would have a big impact
financially and economically for working, middle-class families right
in the Chicago region.
In fact, according to one study which I have read, one additional
flight between Chicago and Japan could generate over one-half a billion
dollars in additional economic benefits to the Chicago region. One-half
of a billion dollars would benefit from just one more, one additional
flight between Chicago and Japan.
As I have always said, when we improve transportation, we create
jobs. That is why these negotiations have been underway, and we need to
make an even greater effort to open the skies between Japan and the
United States, because in doing so we are going to create jobs for
working, middle-class families in Chicago, in the Midwest, and also
throughout the United States.
It has been said, according to studies, the economic impact of
lifting the current restrictions on nonstop Chicago-Japan flights could
bring over 2,600 new jobs to the Chicago region just in the next 2
years. Our own Governor, Jim Edgar, stated recently that greater access
to the expanding economies of Asia will mean more investments, more
trade and more jobs for the people of Illinois and the Midwest.
That is why business and labor and politicians of both political
parties have joined together in the Midwest-Asia coalition, working
together to emphasize how important opening the skies between the
United States and Japan is to working folks right here in the United
States, particularly in our home area, in the Chicago area.
Some would say, ``Well, what would happen if we do nothing, if
nothing changes? What happens if we are unable to expand our current
agreement with Japan?'' Recent study found that the current
restrictions on air travel between the United States and Japan cost the
Midwest thousands of jobs and millions of dollars in salaries and
probably at least $1 billion in lost investment in the Midwest and in
the Chicago region, $1 billion in lost investment because of the
current restrictions.
Think about what that would mean to the folks in the Chicago area,
working middle-class families who would benefit from increased economic
opportunity, more jobs and more opportunity.
My colleagues, I stand in strong support of the negotiations that are
currently underway. I stand in strong support, as I know the folks back
home do as well, of opening the skies between Japan and the United
States. Because, as these negotiations move forward, I think it is
important that our negotiators know that we stand behind them and that
we are looking to them to open the skies, because by opening the skies,
bringing in additional flights between Chicago and Japan will bring
jobs to the Chicago region, more jobs, more opportunity. And frankly it
is going to be in the best interest of the working folks, the middle
class, in the Chicago region.
I yield back my time to the gentleman from Illinois, and again thank
the gentleman from Illinois [Mr. Hastert] for the opportunity to speak
on this important issue.
Mr. HASTERT. Mr. Speaker, I include for the Record two editorials
from Midwest papers:
[From the Chicago Tribune, July 3, 1997]
Phasing in Open Skies With Japan
O'Hare International Airport is the world's busiest in
terms of passenger volume, yet it ranks only 30th in
international business. Its overseas volume is less than half
that of New York, Los Angeles and Miami--the top three
international airports.
A broad-based, clout-heavy group of Midwest businesses and
civic leaders--headed by Gov. Jim Edgar, Mayor Richard Daley
and former U.S. Rep. Robert Michel--wants Washington to do
something to help O'Hare. The administration should take the
group's advice and act accordingly.
Specifically, the Midwest-Asia Aviation Coalition wants
United States negotiators to reach a deal with Japan that
would adopt a phased-in approach to competition, gradually
allowing more flights between the two countries and
permitting marketing agreements between U.S. and Japanese
airlines.
A bilateral pact that immediately establishes open trade,
or ``open skies,'' would be preferable and should be the
first, and ultimate, goal, but the Japanese government so far
has refused, arguing the U.S. won't open its domestic market
to foreign airlines. Japan, however, would accept phased-in
competition.
United Airlines and American Airlines, which operate hubs
at O'Hare, are coalition members and favor a phased-in
approach like that taken with Germany and Canada.
Minneapolis-based Northwest Airlines wants unrestricted
access to Japan, with no limits on the rights of U.S.
carriers to fly to other Asian destinations. Japan is willing
to phase in open skies if there are limits on flying on to
other countries.
International flights at O'Hare are restricted by the
aviation pact between the U.S. and Japan. It gave United,
Northwest and Federal Express the right to fly to Japan and
beyond, but American and other airlines are allowed only
limited service. At O'Hare, United has only six flights a
week to Japan, while American can't even fly between Chicago
and Tokyo. Northwest, with hubs in Detroit and Minneapolis,
has almost as many weekly flights from the U.S. to Japan as
the rest of the domestic airlines combined.
The coalition is just being realistic; Northwest is being
protectionist. The choice doesn't have to be between
immediate open skies or the status quo. The U.S. and Japan
can allow more flights and new alliances that will promote
business and growth.
A recent study by Arthur Andersen concluded that the number
of passengers flying through O'Hare to Asia would more than
double if sufficient flights were available. The increased
traffic would add jobs and foreign investment in Illinois and
the Midwest.
Gradual liberalization doesn't mean the goal of open skies
should be abandoned. In fact, as the benefits of greater
competition and service are realized, the resistance to open
skies will dissolve. Meantime, some progress is better than
none.
____
[From the Chicago Sun-Times, July 2, 1997]
More Flights to Japan
As a Trivial Pursuit question, it is a lock for Chicagoans:
What's the busiest airport in the world? O'Hare of course.
But where does O'Hare rank in international flights?
A surprising 30th. O'Hare's international volume is less
than half that of New York, Los Angeles or Miami.
[[Page H7502]]
An opportunity to help rectify that comes as negotiators
from the U.S. and Japan meet to retool a 1952 pact governing
flights between the two countries. Under the outdated rules
Chicago is artificially held to about 20 flights to and from
Tokyo a week.
Some in the airline industry are pushing for ``open skies''
legislation, essentially allowing an unfettered flow of air
traffic between the two countries. Negotiations, however,
should not be allowed to collapse into an ``all-or-nothing''
conclusion. While we favor open skies just a liberalized
stop-gap measure featuring a phase-in approach would be
acceptable. Such a moderate approach is backed by a broad
coalition of Midwest business, labor, trade, civic and
tourism groups.
Economics demand it. currently, Japanese businesses may
find the Chicago and Midwestern economic climate attractive,
but the hassles of getting here send them searching for other
American locales. If restrictions were dropped, the number of
trans-Pacific passengers could double by 2000, says the
Midwest-Asia Aviation Coalition. The coalition estimates that
increased air service could result in 2,670 jobs to the
Midwest and $52 million in additional salaries.
The current system, as Department of Aviation commissioner
Mary Rose Loney says, ``has put Chicago at a competitive
disadvantage with other cities.'' Chicago is too important an
economic engine for the Midwest to be hamstrung by
regulations written 45 years ago in the pre-commercial-jet
age.
Mr. Speaker, I yield to my colleague on the Subcommittee on Aviation,
who also serves with another Illinois colleague who could not be here
tonight and talk. The gentleman from Pontiac, IL [Mr. Ewing], certainly
has been a leader in this country. The gentleman has served with great
distinction and has been a very active advocate of getting these talks
in place and done so that we can start to open up our trade and air
trade, aviation trade with Japan, and certainly hope that this would be
expedited, especially in these talks that are going on this month and
next week, September 22.
Mr. Speaker, I yield to my good friend, the gentleman from Chicago
[Mr. Lipinski].
Mr. LIPINSKI. I thank the gentleman from Illinois [Mr. Hastert] for
yielding.
The American and Japanese negotiators are on the verge of replacing
this outmoded 1952 agreement with a new accord which would dramatically
increase air service between our two countries. Eventually such an
agreement can lead to total deregulation or open skies.
I hope that Japan is not posturing. I hope that we are not posturing.
I hope that we can use common sense and really make progress. I urge
the administration to complete an agreement with Japan this month which
liberalizes air service. We really cannot afford to wait. We have
waited far too long already.
We have been asking both sides to put aside symbolic differences in
the spirit of achieving real gains for consumers and business, not only
in Chicago, IL, the Midwest, but really throughout this Nation. Opening
up air travel with Japan just will give us enormous economic benefits,
not only in this Nation but in Japan also.
Liberalization is a very important first step. The next step in
ensuring that the Midwest historical disadvantage in air service to and
from Asia is corrected with significant gains in the number of flights.
Mary Rose Loney, the city of Chicago aviation commissioner, said a
new agreement is sorely needed even if it stops short of complete open
skies. Dogmatic insistence on open skies may forgo present-day
opportunities for a greater liberalized regime between the United
States and Japan.
I recognize that open skies with Japan is not on the immediate
horizon. The United States may need to accept a phased-in approach so
our agreements would be like Germany or Canada, ones that started out
very slowly but have expanded tremendously.
____________________