Japan Airlines 1H2014: sluggish domestic demand from tax rise, but lower fuel price boosts outlook

Japan Airlines and All Nippon Airways dovetailed their 1H2014 (the six months to 30-Sep-2014) performance. JAL, which gained fewer Tokyo Haneda slots than ANA, had a more stable international performance but also less international growth. Both airlines cut domestic capacity (JAL more so than ANA) and experienced yield decreases but higher load factors. Both also now admit Japan's consumption tax increase has impacted domestic demand.

JAL, expecting a lift from lower fuel prices, is raising its full-year forecast while ANA is retaining its forecast. JAL now expects an enviable 11.8% operating margin. The balance of the year will see JAL take control of small regional carrier Hokkaido Air System and resume service between Osaka Kansai and Los Angeles.

JAL is still considering a return to Latin America with its own metal, and as an initial step will codeshare with new oneworld partner TAM. This adds to its existing Latin America codeshares with American Airlines and LAN.