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10 years after corporate near-death experience, Japan Airlines looks to expand

Japan Airlines Co. employees introduce themselves at a seminar on the "JAL Philosophy" in Tokyo's Ota Ward, on Jan. 14, 2020. (Mainichi/Munehisa Ishida)

TOKYO -- Ten years after an ignominious bankruptcy filing and the ensuing deep cuts to staff and routes, Japan Airlines Co. (JAL) is again looking to expand its roster of international destinations.

"We'd like to seek to expand with Narita and Haneda airports as hubs," JAL President Yuji Akasaka told the Mainichi Shimbun.

The company has claimed that, following its January 2010 filing under the Corporate Reorganization Act, it has made progress in shifting its employees' awareness of JAL corporate philosophy. However, some critics say incidents involving employee drinking -- including a mechanic who dodged a breath test before going on shift, and a co-pilot convicted for attempting to report for work on a November 2018 flight out of London with a blood-alcohol level over the legal limit -- tell a different story.

JAL appointed Kazuo Inamori, founder of electronics giant Kyocera Corp., as its chairman after it filed for protection from its creditors on Jan. 19, 2010, and slashed its routes and workforce to rebuild its balance sheet. In return for a massive injection of public money, JAL was not allowed to freely expand its routes. The airline thus turned to boosting its earning capacity on existing routes instead of expanding its global network.

After the government lifted the restrictions in 2017, JAL launched efforts to secure slots at more profitable international destinations. Riding the rise in inbound tourist numbers, the airline aims to increase its international routes from about 400 now to 500 by 2027.

When the number of international flight slots at Tokyo's Haneda Airport is increased in March 2020, JAL will boost its daily flights to and from Haneda from the current 22 to 34. In future, the company plans to introduce fuel-efficient Airbus A350s on its international routes.

Moreover, JAL is poised to expand low-cost carriers (LCCs) under its umbrella. Zipair Tokyo Inc., a wholly owned subsidiary, will commence flights from Narita International Airport east of Tokyo to Seoul and Bangkok in May, and will begin flying to North America in the 2021 business year.

Zipair President Shingo Nishida told the Mainichi Shimbun, "We're aiming to successfully establish an unprecedented model as an LCC that flies on long- and medium-distance routes."

However, typical LCC business models are built on squeezing profits from flying smaller aircraft on short routes at very high efficiency. It remains to be seen whether Zipair can turn a profit on longer routes.

Furthermore, JAL faces keen competition in the LCC market from its rival ANA Holdings Inc., which made the move into the low-cost sector years ago. And ANA is also planning to merge two of its LCC subsidiaries -- Peach Aviation Ltd. and Vanilla Air Inc. -- and start flights on medium-haul routes.

Even as JAL seeks to expand its operations, the alcohol-related arrest of the JAL co-pilot in London in autumn 2018 suggests lax employee discipline. The company subsequently set up an in-house investigative panel to prevent a recurrence. However, there was a spate of incidents in which excessive alcohol levels were detected in crew members in pre-flight breath tests. The Land, Infrastructure, Transport and Tourism Ministry issued a business improvement order to the company twice in a single year -- an extremely rare move.

During the corporate rehabilitation process, Inamori worked out a "JAL Philosophy" outlining values that employees should share in a bid to change staff awareness. JAL employees are required to attend seminars intended to instill the philosophy three times a year. However, employees have pointed out that not all is well at the airline, including a former pilot who said, "There are still problems with the working environment, such as stress."

(Japanese original by Munehisa Ishida, Business News Department)

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