Japan Airlines
and Japan Air System
integrated their operations on Wednesday under a new holding company dubbed Japan Airlines System Corp., becoming the sixth-largest airline group in the world in terms of passenger miles.

JAL President Isao Kaneko became president and chief executive officer of the new holding company the same day, with the presidents of both carriers greeting passengers at boarding gates at Tokyo`s Haneda airport.

JAL has a large network of international routes but has not done well in the domestic market, where rival All Nippon Airways has a dominant share. By integrating its operations with JAS, which has a large domestic web, JAL hopes to compete domestically with ANA on an equal footing and boost its profits.

In the first phase of their management integration, JAL and JAS will maintain their current flight services, becoming subsidiaries of Japan Airlines System with JAS Sales, a new company formed under the new holding firm, has taken over their ticket sales. The carriers have also set up a system that allows customers to book flights on either airline at their reservation centers.

In the second integration phase, beginning in April 2004, the two companies will completely merge their operations into three group firms with integrated computer systems.

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