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Aviation History
1986
1986 - 0031.PDF
the domestic cake. Its grievances centre on ANA's 50 monopoly routes, many of which generate high revenues. JAL points out that while it faces competition from 14 international airlines on the 2 • 1 passenger million Tokyo-Hong Kong route, ANA by contrast has a monopoly on the 1 • 1 million passenger Tokyo- Komatsu domestic route. Hashizume outlines JAL's case: "Some 73 domestic routes are occupied on a monopoly basis, including 34 of the top 50 routes. Another 13 are served by two carriers. Meanwhile we are only allowed to operate to five points". Hashizume is clearly frustrated by the shackles around JAL's domestic ambi tions. Although JAL is in the black on its domestic route network overall, only five of its 13 routes are individually profitable. Since 1973, says Hashizume, JAL's domestic market share has fallen from 32 • 1 per cent to 20 • 1 per cent. While the domestic revenues of ANA and TDA have grown 13 per cent and 17-4 per cent respectively, JAL's has climbed only 11-3 per cent. For some years JAL has unsuccessfully pressed the MoT for fill-up rights on the domestic legs of international flights. It feels aggrieved that, while it has taken international services to Kagoshima in a flag-flying exercise, the MoT will not allow JAL to collect fares for the domestic sectors of its Tokyo-Kagoshima-Hong Kong or Tokyo-Kagoshima-Shanghai services. It can collect only for the whole routes or the international sectors. Furthermore, JAL argues that, to combat United Airlines' newly acquired Pacific strength, JAL must have a more extensive domestic feeder network. Top of JAL's list are the ANA monopolies from Tokyo to Komatsu (1-1 million passengers), Hiroshima (760,000) and Matsuyama (730,000), and Tokyo to Kagoshima (1-1 million), operated by both ANA and TDA. In recent years JAL, arguing that a stag nant market needed a competitive boost, has persistently set the pace for more domestic freedom in the face of recalci trance from its rivals and obstinance from the MoT. It pressed for, and eventually won, a limited degree of fare flexibility, including discounts for tour groups and students. It prompted a "gift-war" with rival ANA in 1984 on the trunk services when it began offering T-shirts, tea sets, watches, and cameras to travellers, until the MoT ordered a halt to hostilities. For years it lobbied tirelessly for a two-class domestic service, a battle only recently won when the MoT gave the thumbs-up. Ironically the 747SR crash meant that JAL's October launch of first-class on domestic flights was postponed, leaving ANA to steal the limelight with the inau guration of Japanese domestic two-class operations. While JAL believes that competition in domestic services should reflect the competition it faces from international airlines, ANA is anxious to defend its own powerful position. Indeed Syunichi Souma, ANA's senior manager corporate affairs, argues that there is a case for edging JAL off the domestic stage alto- FLIGHT INTERNATIONAL, 4 January 1986 All Nippon Airways gether. "JAL's domestic services were intended to help it compete with other international carriers. Now JAL is ranked number one among lata airlines [highest international revenue tonne kilometres], and can make enough money on its inter national routes alone," he says. "With the current growth of international traffic there is plenty of room for JAL to expand". Japan Air Lines domestic routes ° \ \ i [^ Fukuokayg^r; / off / ^jT i Okinawa Sapporo V / V h *• y / XJs-^^^T ^if Tokyo ;>^^^_-^(Osaka/£r/t'> J If JAL muscles in on domestic services it will want to cream-off the high yield routes "which we need to cross-subsidise our thinner local routes," says Souma, pointing out that only 23 of its 71 routes make a profit, and that break-even load factors on some routes served by the YS- 11s are 80 per cent. Daily fleet utilisation is about 7hr, "one of the lowest in the world for an airline our size". ANA is unlikely to be able to make significant efficiency gains before the mid- 1990s, when restrictions on jet movements may ease, and Souma foresees no long- term replacement for the YS-11 being made before that time. The crash of JL123, a domestic flight between Tokyo and Osaka, Japan's second busiest route, has served only to underscore ANA's resistance to JAL's domestic expansion. ANA claims that both it and TDA have suffered a more dramatic revenue loss than JAL because of their almost total dependence on domestic traffic. ANA's business dipped 5 per cent after the disaster, and it recently reported half-year profits down 10 per cent to $30 million, when substantial growth had been forecast. TDA fears that the crash backlash will wipe out the entire Yen 3,800 million projected profit for this year. Meanwhile JAL, whose domestic
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