FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
1994
1994 - 0020.PDF
NEWSMAKERS A RELUCTANT REFORMER Japan Airlines faces major battles at home and abroad as it struggles to regain competitive strength, says chairman Susumu Yamaji. The title of radical reformer may not sit easily alongside the name of Japan Airlines (JAL) chairman Susumu Yamaji, but it has fallen to the veteran bureaucrat to guide the nation's flag-carrier through its most traumatic period. However long the current recession in Japan lasts, JAL, along with many major Japa nese businesses, will emerge with a substantially different corporate mindset. The main question is whether the neces sary reforms will reach far enough, and quickly enough, for JAL to become competitive with US and European giants which have already swallowed the same bitter medicine. Yamaji, who held senior po sitions in the transport minis try and the prime minister's office before becoming presi dent of the then state-owned airline in December 1985, con cedes that "fundamental is sues" have been raised by Japan's unprecedented slump. He says: "We face some basic questions about how Japanese capitalism should be. I think a new order will come out of this recession." The most obvious question is whether Japanese companies can continue their unwritten guarantee of lifetime security for employees while reducing the astronomically high over heads which now cripple their competitiveness overseas. JAL is no exception, although Yamaji warns that the company will have to "...go very care fully" if its labour unions are to co-operate in the restructuring. It is a measure of the unions' understanding of JAL's predica ment that they have already agreed to symbolic concessions such as dropping pilots' rights to chauffeur-driven cars to and from Tokyo's Narita Airport, and taxis for the cabin atten dants. Other changes include an end to the dispute over flightdeck manning levels on Boeing 747-400s, of which JAL is the world's largest operator. Whether they will go along with the further-reaching re forms needed remains to be seen, however, although the use of an increasing number of foreign pilots has caused fric tion. JAL has started to move much of its heavy maintenance offshore, investing in joint ven tures in China, Singapore and the USA, and plans to recruit and base 30% of its flight attendants in cheaper cities such as London, Frankfurt, ments, improving productivity, and offshore maintenance. JAL hopes to save ¥100 bil lion this financial year and will cut capital investment by an other ¥100 billion by deferring aircraft orders and suspending the development of new build ings — for example, at Kansai Airport in Osaka. This has not been enough to halt the losses, however, and JAL has revised its break-even forecast for the year to a net loss of ¥26 billion, on sales of ¥970 billion. Yamaji, who has been chair- P* ' Susumi ^| V j3 - i Yamaji "We face some basic questions about how Japanese capitalism should be. I think a new order will come out of this recession." Singapore, Hong Kong and Sao Paulo by 1996. Another psychologically im portant move has been to offer early retirement to employees aged between 35 and 45 with at least ten years' service, as well as a one-year sabbatical to those over 50. Managers at vice-president level also have to move jobs at the age of 56, while board members and sen ior managers face a pay freeze and bonus cuts. More substantive savings have come as part of a four- year ¥600 billion ($540 mil lion) cost-cutting plan launched in June 1992. Yamaji says that ¥42.7 billion was saved in the six months to September, through a hiring freeze, new working agree- man since 1991, blames this on the steady decline in passenger volumes and yields, thanks to recessionary decline in busi ness and leisure travel. JAL has tried to boost domestic serv ices, to offset the effect of the strong Yen on foreign-currency earnings, but still derives al most 63% of its revenues from international flights. These revenues are affected significantly, Yamaji believes, by the "predatory" behaviour of US airlines, which enjoy almost unlimited fifth-freedom rights beyond Japan thanks to an air services agreement (ASA) which dates back to the post-war US occupation. US airlines carry 70% of the traffic from Japan to the USA, even though Japanese travellers out number Americans by six to one, and occupy 30% of the slots at Narita. The 1952 ASA has become a major irritant, with the Japa nese pressing for capacity re strictions which would end the "dumping" which, they claim, undermines yields across the region. Talks on a new deal are still deadlocked, but Yamaji believes that failure to replace the ASA could affect US access to Kansai Airport, which will open in September 1994. Yamaji, who is chairman of the International Air Transport Association's executive com mittee for 1993-4, says: "Al most without exception, the airlines of this region are grow ing increasingly exasperated with the predatory tactics of American carriers." He adds: "All over the world, in Europe, in South America, we hear the same thing — US carriers and US policies are inflicting seri ous damage on the interna tional airline industry." Yamaji dismisses the USA's apparent enthusiasm for free "open skies", saying: "The air line industry of any one coun try is nearly always viewed in the context of the national interest, with the protection of cabotage rights and restriction on foreign ownership. The USA is a shining example." As for US airline chiefs who accuse Japan of seeking "man aged trade" in aviation, Yamaji says that they are "evading the point". He says: "Most coun tries, including the USA, do not want aviation to be gov erned by GATT [the General Agreement on Tariffs and' Trade], but by the current bi lateral system. If GATT is applied to the international aviation industry, then the US domestic market, which accounts for 40% of world airline traffic, would have to open up." BY JOHN BAILEY • 18 FLIGHT INTERNATIONAL 5-11 January, 1994
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
