Is Anyone Thinking? JAL May Lose International Flights

Sunset on JAL or mere hot air?
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Japan’s Mainichi Daily News is reporting the Japanese government has discussed transferring all of JAL’s international routes to ANA. JAL, currently Asia’s largest carrier (and flies to Brisbane and Sydney), would only operate domestic fights.

This is huge news but is being treated with the same nonchalance as if the airline announced it was cutting pillows.

Let’s discuss why this plan is detrimental, and then consider if it’s actually serious or a ploy.

Detrimental

The key reason not to go ahead with this is that it would be a death blow to JAL. JAL’s future depends on international services. Already high speed trains link Japanese cities, and in the near future those trains will get faster and cheaper, making air service obsolete. There will be a market for linking cities on Japan’s various islands, but no reasonable business plan could propose having a major airline focus exclusively on domestic flights in a country with a relatively small land mass.

So if JAL will need international routes in the future, the proposed axing of international routes will ensure JAL’s future will remain a shadow of its past. JAL customers who will be forced to switch to ANA won’t want to switch again when JAL re-opens international routes. JAL would have a very hard time regaining market share, especially if it has to go up against the Star Alliance antitrust immunity pact.

A pure domestic JAL may be financially viable in the near short-term, but in the medium- and long-term it will cost the airline dearly.

Serious or ploy?

It’s clear this idea is ridiculous. But maybe that’s the whole point to it. It was reportedly leaked by both the government and JAL. Anonymous officials are quoted saying it’s a good idea.

It is likely to assume this was leaked to cause public commotion (Hollowmen, anyone?). Perhaps the leak is even to force the airline’s employees and retirees to accept a pension cut. Three of JAL’s eight unions, including the largest, have accepted the cut. Bankruptcy has also been mooted.

It could also be used to ease public acceptance of a foreign carrier (likely American or Delta) effectively bailing out JAL, an act that would cause the Japanese to lose face.

It should be noted this was “discussed” during a day of multiple meetings. This could have  been a footnote discussion and one of just many options considered.

This leak of axing international routes make the pension cut and foreign bail out seem like a walk in a cherry blossom park. Those who do not pause to consider if such detrimental actions are serious propositions or mere hot air will gladly accept some other restructure with little noise.

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