Japan airlines sustain ‘transport infrastructure’, domestic flights

FPI / April 20, 2020

The two leading airlines in Japan have maintained near normal domestic flight schedules amid the coronavirus crisis, even though most flights have less then 10 passengers, if any at all, a report said.

“The government has declared an emergency, but hasn’t asked the airlines to reduce flights — rather they want to maintain the transport infrastructure,” a person familiar with operations at the airlines told the Japan Times on condition of anonymity.

“Some planes are flying with fewer than 10 passengers, but we feel we need to keep that transport infrastructure,” the person added.

ANA Holdings Inc and Japan Airlines Co Ltd (JAL), the nation’s two biggest airlines, have cut around 90 percent of international flights but left their domestic networks relatively intact, the Japan Times noted, citing industry data. The two airlines normally fly around 800 or more domestic flights daily.

ANA and Japan Airlines are currently flying around two-thirds of capacity with 10 percent of the usual demand, according to the airlines. That is despite Japan declaring a one-month state of emergency in major cities on April 7 that was expanded Thursday to include the entire country.

An official at the Japan Civil Aviation Bureau, which oversees the carriers, described it as “business as usual”, with the airlines setting schedules based on business conditions. The government only requires them to offer refunds or new bookings to passengers affected by cancellations, the official said.

Other airlines in the region, including India, Thailand and the Philippines, have grounded all domestic flights under government orders. Airlines in Australia and New Zealand are flying less than 5 percent of their normal schedules due to travel restrictions and reduced demand.

Japan has not restricted domestic travel, and authorities in Tokyo and other big cities are only requesting that people stay in and ask bars and restaurants to temporarily close without penalties if they don’t.

The Scheduled Airlines Association of Japan, which represents ANA, JAL and 17 others, estimates that the coronavirus pandemic will cost its members some ¥500 billion ($4.64 billion) in lost revenue by the end of May.

ANA has asked commercial lenders and the state-run Development Bank of Japan for ¥400 billion in aid, as it burns through cash during the crisis, the Japan Times noted.

“I expect current cuts to operations to continue,” said a second airline industry source familiar with the matter, asking not to be identified. If the coronavirus downturn lasts a year, ANA will need at least ¥1.3 trillion, a source told the Japan Times.

An ANA spokeswoman said the carrier would consider further cuts to domestic flights, but because it was a necessary form of transportation it would continue to cooperate in maintaining basic services.

“The crucial question is whether there is going to be at least a partial recovery in operations by the summer,” said Kazuma Ogino, a credit analyst at Nomura Securities in Tokyo.

Free Press International