FEDEX, JAPAN CLASH OVER "BEYOND' AIR RIGHTS

FEDEX, JAPAN CLASH OVER "BEYOND' AIR RIGHTS

The dispute between the United States and Japan over the legality of U.S. carrier flights beyond Japan has now spilled over to the cargo side.

Federal Express Corp. has asked the Department of Transportation to suspend one weekly cargo flight each by Japan Airlines and Nippon Cargo Airlines in retaliation for Tokyo's alleged refusal to permit Federal Express to operate one weekly flight linking the United States, Japan and Cebu, the Philippines.Japan Airlines operates 22 weekly cargo flights between the United States and Japan, while Nippon Cargo operates 12. Federal Express, the largest all- cargo carrier in the market, operated 38 weekly flights in the second quarter.

Federal Express asked the Japanese Foreign Ministry for authority to serve Cebu beyond Japan as part of a revised summer schedule that would have run until Oct. 30. But Japan refused, saying the company's Tokyo-Cebu operation was a new service and its request to start flights should have been filed with the Ministry of Transport.

Federal Express, which obtained its Japanese authority following its

purchase of Flying Tigers in early 1989, said terms of a 1952 agreement that governs air services between the two nations allow it to use Tokyo as a midpoint to serve other international markets.

The Japanese and their carriers fired back with predictable volleys. The government said the company's request for sanctions "lacks foundation" and said it will take "necessary and appropriate measures" if the DOT follows suit.

Japan Air said the timing of Federal Express' demands was "particularly inappropriate" given the fact that talks are under way to revamp the 1952 accord. Nippon Cargo said shippers would be harmed if it were forced to curtail any of its flights.

The dispute is a virtual carbon copy of a simmering fight between United Airlines and Japan over Tokyo's ban on the airline's proposed service beyond Tokyo to Sydney, Australia, and Kuala Lumpur, Malaysia. The Japanese contend United has not agreed to language that at least half of the cargo and passengers on those flights board in the United States. United has argued that no U.S. airline serving Japan is bound by that condition.