Business

JAL to chase individual domestic travelers

Japan Airlines Corp. will step up efforts to woo individual domestic travelers to better compete with rival All Nippon Airways Co., JAL President Toshiyuki Shinmachi said in a recent interview.

“Revenue per passenger is greater for individual travelers than group passengers,” said Shinmachi, who became president in June. “We are aiming to raise the level of individuals to 64 percent” from 63 percent in fiscal 2003.

JAL was created through a merger between Japan Airlines Co. and Japan Air System Co. in October 2002. The combined operation of JAL now splits the domestic market with ANA.

JAL has been trying to increase revenue on its domestic routes by luring independent travelers, who pay higher fares than group tourists.

One measure to attract individual travelers is the June debut of Class J seats, which offer passengers on domestic flights more room for just 1,000 yen over the economy class fare.

JAL said the new seating class will probably draw more individual customers than the Super Seats, which cost some 2,000 yen to 3,000 yen more than economy class but include various services, ranging from exclusive check-in counters to light meals and alcohol.

“We are seeing stronger-than-expected demand for Class J seats,” Shinmachi said. “We had initially predicted a 70 percent to 75 percent load factor, but it proved better than that,” he said, declining to cite specific figures.

While JAL is busy competing with ANA for a bigger slice of the market, it remains alert to government moves to support struggling startup airlines, including Hokkaido International Airlines Co. (Air Do) and Skynet Asia Airways Co.

The Land, Infrastructure and Transport Ministry is considering allotting more landing slots at Tokyo’s Haneda airport to startup carriers in February.

While welcoming the entry of startup airlines to promote competition, Shinmachi expressed strong opposition to the transportation ministry’s plan to give the newcomers landing-slot priority at Haneda.

“We have 2 billion yen in revenue from each flight. Slots are very precious,” he said. “We cannot always readily agree with what the transportation ministry says.”

Slots at Haneda are highly coveted by airlines, for which flights in and out of the capital’s airport are cash cows.

But the two giant airlines occupy most of the slots at the airport. Of the 387 landing slots at Haneda, 182 are currently allotted to JAL and 158 to ANA, leaving little room for the newcomers.

Given its limited capacity, the ministry reviews and reallocates the landing slots at the airport every five years.

JAL aims to return to the black this fiscal year, which ends next March. But a worrying factor is the rising price of jet fuel, which accounts for some 13 percent of the carrier’s operating expense.

For the April-June period, jet fuel averaged $41 per barrel, compared with $30.5 a year earlier, costing the carrier 6.1 billion yen more during the first quarter than the previous year. This has prompted JAL to forecast a 30 billion yen rise in fuel costs for the full fiscal year.

“We don’t think that the fuel prices will return to the previous levels soon,” Shinmachi said, adding that JAL has mapped out measures to cope with soaring oil prices.

JAL plans to slash 21 billion yen in maintenance and operational costs through such measures as reviewing parts procurement and flight routes. Higher international fares and cargo charges will also generate 9 billion yen to cover the remaining shortfall. JAL raised international flight fares by 5 percent in July.

“Although I cannot be 100 percent sure we will not have to hike fares on our domestic flights, we are trying our best to avoid it,” he said.

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