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JAL to scrap 31 domestic routes and 29 international routes

6-Apr-2010 12:03 PM

Japan Airlines reportedly plans to eliminate 31 domestic routes (all of which connect regional cities) by the end of FY2010, higher than the previously expected 18 routes, and 20 international routes, higher than the 16 routes initially specified (The Yomiuri Shimbun/Asahi Shimbun/Nikkei Daily/Kyodo/Bloomberg/Japan Times, 04-Apr-2010). Details include:

  • Domestic routes: The routes to be abandoned will reportedly mostly be loss-making services to smaller cities, including 13 routes to/from Central Japan International Airport (Centrair, also known as Chubu) and nine domestic routes to/from Nagoya Airport. The carrier currently operates approximately 150 domestic routes, of which approximately 20% will be eliminated under the carrier's Corporate Resuscitation Plan. Among the airports to be subject to major route cuts are reportedly Kagoshima, Matsuyama and Yamagata airports, where the number of JAL routes will be reduced by four, three and two, respectively. Routes including Kagoshima-Okayama and Kagoshima-Hiroshima are also reportedly likely to be eliminated, as the viability of these routes will deteriorate with the full launch of the JR Kyushu Shinkansen express train line scheduled for Nov-2010;
  • International routes: The carrier will eliminate 29 international routes by Mar-2011. Among the 16 routes listed in the plan drawn up in Jan-2010 were services between Narita and Rome and between Kansai International Airport and London. In addition to these, routes such as Narita-Sao Paulo, Narita-Milan, Kansai-Bangkok and Kansai-Beijing will be eliminated. Of the eight current international routes to/from Chubu, five will reportedly be abandoned. However, JAL will operate seven new routes to/from Haneda, including services to San Francisco and Paris. As a result, JAL's overall number of international routes will be reportedly reduced to 43 at the end of FY2010, down from 65 as of the end of FY2009;
  • Fleet plans: JAL will reportedly replace widebody aircraft with smaller aircraft at least five years earlier than previously planned, and will carry out the initiative not later than the end of FY2010;
  • Creditor banks: The carrier's major lending banks (Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking, the Development Bank of Japan and Mizuho Corporate Bank) reportedly told its management that any further loans are conditional on it making drastic reductions to its international route network;
  • Affect on local economies: The airline plans to conduct negotiations on the route reductions with concerned parties, with negotiations with local governments expected to be challenging. However, Japan's Land, Infrastructure, Transport and Tourism Ministry and local governments stated they expect other airlines, including LCCs, to take over some of the routes.