Declines in passenger loads and increases in insurance premiums after last month's devastating terrorist attacks in the United States are threats to Japanese airlines as they are to other carriers, but reaction in Japan may not be as drastic.
Meanwhile, the prospect of a large-scale impact on local aircraft builders remains unsure, though their major U.S. partner, Boeing Co., has said it may lay off almost a third of its commercial jet workforce.
Although a major victim, Japan Airlines has no plans to lay off any of its 18,000 employees, said Yoshie Otaka, assistant manager for public relations at JAL, citing the Japanese custom of long-term employment.
"The employment environment in Japan is different from the U.S. and Europe. We have no plan to review our employment after substantial restructuring in the 1990s," Otaka said.
An official of All Nippon Airways also opposed further cuts in its 13,500-strong workforce but said the company is considering all possibilities.
The impact of the attacks was limited on the nation's third-largest carrier, Japan Air System, as its international flights are limited to Seoul and a number of Chinese cities, a JAS official said.
A government survey of the three airlines finds that their combined revenue losses came to 10.7 billion yen, or 0.5 percent of their annual income from passenger services, in the two weeks after the Sept. 11 attacks.
The losses, mostly at JAL and ANA, comprise 3.3 billion yen from the airport closures in the U.S. and 7.4 billion yen from a more than 50 percent fall in U.S.-bound passengers as well as smaller declines in other destinations and cargo.
The sharp setback in U.S.-bound air traffic forced JAL to slash 34 of its weekly flights to Honolulu, Los Angeles and Chicago in October and November.
The flight reduction may be extended if passenger demand continues to be sluggish, which is likely following the launch of strikes against Afghanistan on Sunday.
JAL is preparing to endure several months of hardship, but Otaka conceded that dealing with a prolonged international conflict is beyond the carrier's current scope.
The three carriers and their affiliates are also estimated to shoulder 40 billion yen in annual costs for insurance surcharges, with coverage nevertheless slashed dramatically, forcing them to solicit a government bailout.
The companies are still considering whether to pass on this surcharge -- between $1.60 and $3.10 per passenger -- by way of fare increases.
However, these impacts have yet to force JAL to review its medium- to long-term procurement plan for aircraft and equipment, Otaka said.
JAL's plan to purchase at least 15 Boeing jumbo and medium-size jets by March 2004, including replacements for retiring aircraft, is being left intact, unlike similar plans by carriers in other countries, she said.
According to Boeing's delivery projections, revised a week after the terror attacks, the company's commercial airplane deliveries will fall to 500 from the previously expected 538 in 2001, to the low 400s from between 510 and 520 the year after, and will continue to decline in 2003.
Based on the figures, the U.S. aircraft manufacturer said its commercial airplanes unit is setting plans to slash 20,000 to 30,000 jobs by the end of 2002.
But the move stopped short of rocking Japan's aerospace industry, thanks to its continued dependency on orders from the Defense Agency and its diversity of business.
Although vaguely anticipating negative effects due to a dearth of detailed information from Boeing, Japan's three airplane makers will likely avoid downward revisions to their earnings projections.
Mitsubishi Heavy Industries Ltd.'s revenues from the commercial airplane business, or business with Boeing, accounts for only 2 percent -- 2.5 trillion yen -- of its annual sales amounting, a company official said.
The nation's leading comprehensive heavy machinery maker maintains overwhelming strengths in shipbuilding, nuclear power plants, engines and other heavy machines, as well as aerospace, which accounts for nearly 20 percent of sales with orders mostly from the Defense Agency.
The state of the commercial airplane business is basically the same at Kawasaki Heavy Industry Ltd. and Fuji Heavy Industries Ltd.
A Kawasaki Heavy spokesman explained that the Japanese makers, which used to be subcontractors, grew to share development costs with Boeing only in the past decade and are in charge of only a couple of models.
Ishikawajima-Harima Heavy Industries Co., an aircraft engine maker, is also unlikely to suffer significant losses because it focuses on engines for midsize and regional jets, used mostly for domestic flights, which have suffered few effects from the attacks, a company official said.
Indeed, ANA's passenger loads on domestic flights continued to rise in September compared with a year earlier.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.