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THE WHITE HOUSE

Office of the Press Secretary

For Immediate Release January 30, 1998

                     US-JAPAN CIVIL AVIATION AGREEMENT
                                FACT SHEET

JAPAN IS A MARKET OF CRITICAL IMPORTANCE TO THE UNITED STATES.

The U.S.-Japan civil aviation relationship is one the world's largest, accounting annually for 12 billion passengers, over 1 billion tons of cargo and $10 billion in revenue in 1996.

Japan occupies a strategic geographical position, serving as a gateway to Asia. Greater access to this market unlocks many of the best growth opportunities of the future.

THE AGREEMENT SUBSTANTIALLY EXPANDS MARKET ACCESS OPPORTUNITIES FOR U.S. CARRIERS.

More Access to Japan: Established carriers (United, Northwest, Federal Express) gain essentially unlimited access to Japan's market. They gain full rights to offer service between any points in the U.S. to any points in Japan, without any restriction on frequency or capacity. Other passenger airlines (Delta, Continental and American, with two others to follow) will be permitted to triple their access to this market. Weekly flights can increase from 46 to 136, a total of 4,600 additional flights per year. Until now, this type of airline had very limited or no access to this vital market. Charter flights will increase in two years from 400 flights per year to 600, rising eventually to 800. Passengers will have more choices in air travel.

More Access to Asia: The agreement expands flights through Japan to other Asian markets. Established carriers will be entitled to fly beyond Japan without any limitation on frequencies, resolving a longstanding dispute in favor of liberalization. Non-incumbent all-cargo carriers (UPS, Polar Air Cargo) gain valuable new opportunities to transport cargo beyond Japan, helping U.S. business ship more goods to Asia. One additional all-cargo carrier will be able to enter the market in four years.

Global Networks: For the first time, U.S. carriers serving Japan will be able to codeshare (e.g., two carriers offer different legs of the trip under one ticket) with Japanese, American or third country carriers. The U.S. has been a pioneer in codesharing, which permits it to use cooperative marketing arrangements to expand their international networks. Codesharing also will permit U.S. non-incumbent carriers to develop service beyond Japan, to other Asian destinations.

Future Market Opening: Talks begin in three years toward full liberalization. Safety net provisions ensure liberalization continues, even if no new agreement is reached. For example, non-incumbent combination carriers gain the right to operate up to 35 additional weekly round-trip flights, even if no later agreement is reached.

THE ECONOMIC BENEFITS ARE SUBSTANTIAL.

Based on calculations of the President's Council of Economic Advisors, we estimate the agreement will provide the following cumulative benefits over four years:

U.S. passengers will enjoy gains of about $1.2 billion;

U.S. carriers will enjoy additional revenue of about $4 billion;

U.S. exports of aviation services will enjoy a net increase of almost $4 billion (in each year, the U.S. trade surplus in this sector will be almost $1 billion higher than it otherwise would be).

Other benefits are important. Enhanced service stimulates business and tourism. Restaurants, hotels, convention industries and others all stand to gain. American workers and America's cities will share in the benefits as local economies grow.