The Japanese government has rolled out a series of measures — including slashing taxes and fees and extending financial loans — to support the country’s pandemic-hit airline industry.
The measures, announced by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), are aimed at helping Japanese carriers tide through the “extremely difficult business situation” of the coronavirus pandemic, and in anticipation of demand recovery, particularly from Asia.
The ministry notes the “indispensable” role that aviation plays in the country, including linking remote islands and rural areas to major cities, as well as providing employment to more than 240,000 people.
To this end, MLIT says it will support the sector to “strengthen” its foundations, and pursue “safe and stable” growth.
For the current fiscal year, which ends on 31 March 2022, the government will cut nearly 90% of airport-related fees for domestic flights, and halve fuel taxes for its carriers. Taken together, the measures will cut about Y120 billion ($1.1 billion) in costs for the full year.
To support cash flow during the period, state-owned Development Bank of Japan will also provide support with “crisis response loans”. MLIT did not disclose the quantum of these loans.
It is also working to stimulate domestic travel demand, which it believes will recover faster than international travel. Though it gave no further details, it notes that the measures will have to be calibrated according to how the outbreak pans out in the future.
The ministry urged Japanese airlines to pursue carbon neutrality, or reduce emissions, through the use of fuel-efficient aircraft or sustainable aviation fuels.
Like countries around the world, Japan has seen the coronavirus pandemic bring its aviation industry to its knees. MLIT data indicates that for calendar year 2020, total revenue from airlines and airports amounted to around Y2 trillion, a 60% decline compared to 2018’s full-year revenue.
The country’s two largest carriers, Japan Airlines and All Nippon Airways, have made sweeping changes to their business models over the past year or so since the pandemic struck. These include significantly trimming their widebody fleet, as well as doubling down on the long-haul, low-cost market.
The pandemic has also forced two smaller, regional carriers, Solaseed Air and Air Do, to merge operations.