The coronavirus pandemic could damage Japan’s airline industry to the tune of ¥1 trillion ($9.3 billion) over the next 12 months, an estimate by a domestic aviation organization says.
The Scheduled Airlines Association of Japan forecasts carriers such as Japan Airlines and All Nippon Airways will lose over ¥400 billion in revenue in just the four months through May — much worse than the roughly ¥300 billion decline seen during the 2008 global financial crisis.
Passenger numbers have dropped sharply around the world in response to the pneumonia-causing virus.
“We often see flights with passengers in the single digits,” an official at the aviation body said.
The association has asked the government to exempt airlines from paying airport charges and the fuel tax.
In what some are calling an “unprecedented crisis,” the drop in domestic demand has damaged the aviation industry far worse than the 2003 outbreak of severe acute respiratory syndrome, or SARS, which did not directly affect Japan.
JAL and ANA have each decided to reduce domestic flights by about 20 percent this summer in light of numerous events being canceled or postponed, including the Olympics.
“We have never seen such a sharp fall in demand for domestic flights, a source of stable income for Japanese airlines,” said an industry official.
Travel restrictions issued by authorities in many countries have forced Japan’s major airlines to drastically reduce international flights as well.
ANA proposed to a labor union that 5,000 full-time flight attendants take partially paid leave for a few days starting in April so it can continue to keep them employed, the company said.
Some airlines moved to secure enough cash to ride out the pandemic amid a rapidly changing business environment.
ANA plans to receive a loan of ¥100 billion and JAL has decided to issue ¥20 billion in corporate bonds. Star Flyer Inc., which is under the wing of ANA, will borrow ¥4.1 billion from banks.