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Japan's aviation industry undergoes
shakeout
TOKYO - A shakeout in
Japan's airline industry is accelerating, as competition
among airlines intensifies after a decline in the number
of passengers due to the nation's prolonged economic
slump.
Japan Airlines Co (JAL), Japan's top
airline, and Japan Air System Co (JAS), the
third-largest, will integrate their operations under a
holding company in October. This will be the first
merger between major Japanese airlines in 22 years.
The Fair Trade Commission initially expressed
concern over the merger. The FTC claimed that it would
hurt competition because the industry would be
controlled virtually by two major players - the JAL-JAS
alliance and All Nippon Airways Co (ANA).
Faced
with the FTC's misgivings, JAL and JAS decided to give
up to rivals nine arrival and departure slots at Tokyo's
Haneda Airport, out of a total of 192 slots they hold.
The companies also agreed to offer some counter space to
new market entrants. In addition, the partners plan to
lower air fares for domestic flights by 10 percent in
October and keep the fares at those levels for at least
three years.
ANA, Japan's second-largest
airline, supports the reconstruction of Hokkaido
International Airlines Co (Air Do), which filed for
court protection from creditors under the Civil
Rehabilitation Law in June. ANA's decision to bail out
Air Do was prompted by the planned merger between JAL
and JAS. Air Do began operating flights between Haneda
and Sapporo, Hokkaido prefecture, in late 1998, offering
a one-way ticket at 16,000 yen (US$133), about 40
percent less than those charged by major airline firms
at the time.
But major airlines moved to offer
discounts for their flights on the same route, which
slashed Air Do's earnings. In fiscal 2001, Air Do's
liabilities exceeded assets by 303 million yen, with an
accumulated deficit of 7.5 billion yen.
ANA
recently decided to counter JAL's and JAS's planned
reduction in domestic air fares after the October merger
by offering more discounts on domestic flights. ANA, for
example, will introduce a one-day air pass for 10,000
yen, which allows customers to take as many flights by
ANA and subsidiary Air Nippon Co as they want in a
single day. ANA will designate four to five days in the
second half of fiscal 2002 to offer the 10,000 yen
discount tickets.
Meanwhile, the Ministry of
Land, Infrastructure and Transport is considering
creating three private companies to operate the terminal
buildings of Japan's three international airports - New
Tokyo International Airport at Narita, Kansai
International Airport and Central Japan International
Airport. The ministry will also consolidate the work of
building and expanding the airports into a single public
corporation. The airline industry opposes this
government plan, claiming the move is aimed at bailing
out the Kansai airport while increasing the financial
burden on the Narita airport. The plan is expected to
make it difficult for the Narita airport to lower its
landing fees, which are set higher than those at
comparable airports overseas.
(Asia
Pulse/Nikkei)
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