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Japan's Airlines to Get Financial Relief - 2001-10-02

The Japanese government says it will offer some financial help to the nation's airlines, which have been hit hard by cancellations and insurance hikes after the terrorist attacks in the United States.

Japan's airline industry got the promise of some financial relief Tuesday. The government says it will provide the industry with guarantees for up to two billion dollars in skyrocketing insurance costs for the next six months.

Japan's three major carriers, Japan Airlines, All Nippon and Japan Air Systems, had appealed to the transport ministry for help.

Insurers are increasing premiums and cutting liability protection after hijackers used commercial passenger jets to carryout terrorist attacks in the United States last month.

Tom Ballantyne, correspondent for Orient Aviation magazine, says airlines and governments around the world are struggling with rising insurance costs. "The insurance after the U.S. attack is hitting everyone," he said. "Since the insurance companies have put limits on their pay-outs, governments are having to step in and back-up for that extra liability."

The Japanese airlines welcomed Tuesday's announcement of government guarantees but said they hope for direct government support for the cost of new additional security measures, including the introduction of x-ray baggage checks for all domestic flights.

Mr. Ballantyne says those costs will be significant. "The additional costs of security measures which they now have to put it in place is also going to be a big ticket item if they have to impose the sort of security levels which are being demanded," he said. "It appears the United States is probably going to force airlines elsewhere to do this."

Japan's airline industry, like others, is also reeling from large numbers of cancellations in the wake of the terrorist attacks in the United States. The transport ministry says that nearly 300,000 Japanese tourists who had arranged overseas trips canceled their plans after the September 11 attacks. The canceled bookings are worth almost $500 million dollars.