StarBulletin.com

JAL stays on course for isles


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POSTED: Tuesday, January 19, 2010

Japan Airlines, which is expected to supply about 56 percent of all air seats from Japan into Hawaii this year, expects to keep its isle routes despite plans to file for bankruptcy today.

While Japan Airlines has been flirting with bankruptcy for some time and in May laid off its Honolulu-based pilots and closed its Oahu office, the airline has continued to operate six daily flights between Japan and Hawaii.

JAL, which is Japan's largest carrier and one of Hawaii's top five carriers, is launching a massive overhaul to shed the fat and inefficiency that has hobbled Asia's biggest airline, according to the Associated Press. The bankruptcy of Japan's flagship carrier would be followed by a government-backed corporate turnaround.

Once-thriving JAL's passenger traffic slowed amid global economic downturn, swine flu fears, competition from All Nippon Airways and a tarnished safety image, the AP reported. As of November, the carrier's debts totaled $16.5 billion.

After bankruptcy, JAL will continue to operate four daily flights between Tokyo and Hawaii, one between Osaka and Hawaii and one between Nagoya and Hawaii, said Winston Lee, director of passenger sales for JAL's Hawaii region.

“;At the present time we have no word that there are any plans to change the number of flights in and out of Hawaii,”; Lee said. “;They are all strongly performing.”;

Other JAL destinations will see restructuring changes, Lee said.

“;We'll discontinue our Narita and Mexico City service and some Asian routes,”; he said. “;At the same time, we'll beef up some of the code-share agreements that we have in these regions.”;

JAL and Mexicana said last week that they will expand the code-share partnership between Japan and Mexico, using Los Angeles, San Francisco and Vancouver as gateways, Lee said.

The Hawaii Tourism Authority and other tourism organizations have worked to shore up JAL's operations between Japan and Hawaii.

Earlier in the year, HTA officials agreed to provide additional money for a Hawaii Tourism Japan marketing campaign that increased awareness of Hawaii throughout Tokyo and Osaka, said David Uchiyama, HTA vice president of marketing.

The agency also allocated $400,000 to JAL to encourage neighbor island expansion and the addition of seasonal charter flights, Uchiyama said.

Also, the Hawaii Visitors and Convention Bureau has joined with 20 resorts and hotels statewide to offer $6,000 in value-added savings for Japan-based meetings and incentives held through 2010.

“;This new initiative is a testament to our industry's commitment to answer the call of Japan groups seeking cost savings in response to the current economy, while enhancing Hawaii's stature as a global meetings destination,”; said Michael Murray, HVCB's vice president of sales and marketing for corporate meetings and incentives.

JAL's bankruptcy would be a humbling outcome for Japan's once-proud flagship carrier, which was founded in 1951 and spent its early years owned by the state. Along with Japan's economy, it expanded quickly in the decades after World War II and was privatized in 1987.

But it soon became the victim of its own ambitions.

When Japan's property and stock bubble of the 1980s burst, risky investments in foreign resorts and hotels undermined its bottom line.

JAL also shouldered growing pension and payroll costs, as well as a big network of unprofitable domestic routes it was politically obligated to maintain.

More recently, JAL's passenger traffic has slowed amid the global economic downturn, swine flu fears, competition from Japanese rival All Nippon Airways Co. and a spate of safety lapses that tarnished its image. It lost 131.2 billion yen ($1.4 billion) in the six months through September.

A restructuring plan in the works at the Enterprise Turnaround Initiative Corp. calls for about 15,600 job cuts—a third of JAL's work force—and will require the airline to cut the number of flights at home and abroad, according to Kyodo News agency.

Japan Transport Minister Seiji Maehara has said JAL will keep flying through the restructuring process.

Delta Air Lines—the world's biggest airline operator—and rival American Airlines are courting JAL with massive financial offers as the U.S. carriers seek to expand their Asian networks.

Star-Bulletin reporter Allison Schaefers and the Associated Press contributed to this report.