January 19th, 2010
04:36 AM GMT
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I boarded Japan Airlines flight 1381 at Tokyo’s Haneda Airport. My destination: a small town in western Japan called Shirahama.

I slid into my seat towards the rear of the plane. I didn’t have to compete for a spot to toss my overhead baggage, because there wasn’t anyone in my row. In fact, there wasn’t anyone in the seats next to me, the row behind me or in the ten rows in front of me.

Flight 1381 took off from Tokyo more than half empty. The flight appeared about 70 percent empty. That’s a lot of empty seats for this plane, an MD-81 which, according to Japan Airlines, seats approximately 160 people.

Shirahama is near a world heritage site. It’s a gorgeous, remote area of Japan where the ocean meets cliffs of spectacular beauty. It’s not a highly populated area of the country. Yet Japan Airlines flies flights in and out of the small airport in Shirahama twice a day.

Japan Airlines, or JAL, in its November 2009 report, shows the Shirahama-Tokyo flights had an occupancy rate of 54.3 percent.. In October 2009, the airline says occupancy for that route was 39.5 percent. You see a bigger problem for the airline when you look at passenger loads for all of its domestic routes: In November 2009, 95 routes - more than two-thirds of JAL’s domestic flights – had occupancy rates less than 60 percent. Industry analysts say that, generally, 60 percent capacity means that a route isn’t profitable.

Aviation specialist Kotaro Toriumi says all these empty planes symbolize many of JAL’s problems. “JAL was originally a government-controlled company, although it was privatized,” says Toriumi. “What we see today is the legacy of its bureaucratic roots.”

Toriumi says the company’s inflexibility to cut unprofitable routes, downsize aircraft, and adjust to economic downturns has been an ongoing problem for the last twenty years.

As the nation’s flagship carrier, Japan Airlines has been subject to political pressure, both from the national and local governments. Air travel has been traditionally seen as a source of vital transportation and income into communities.

“You can’t just blame JAL. The airline hasn’t been able to eliminate non-profitable routes if they’re popular destinations for Japanese, such as resort locations, because there’s a strong resistance by the government.”

Japan Airlines would not speak to CNN on camera, citing its upcoming bankruptcy proceedings. The airline did respond to CNN questions via a statement. “It is important to note that the profitability of a route cannot be determined by the seat factor alone. Past reports have claimed that the break even seat factor is 75%, but this is wrong to say. It would vary from route to route. Since January 28 of last year, JAL has announced that it will suspend 20 domestic routes, with the closure of four domestic offices. JAL has been progressively switching to the use of smaller, more efficient aircraft on both its international and domestic network.”

I boarded my return flight to Tokyo from Shirahama. Again, I had plenty of elbow room: no one was in my row. There were a few more passengers on the return, but the plane was still mostly empty.

A woman on my flight said that without this flight, Shirahama would be “cut off” from the rest of Japan. She hoped that the route wouldn’t be eliminated. Japan Airlines will have to balance the needs of its customers with its own financial survival. The choices will not be easy, but vital to the airline’s post-bankruptcy future.



soundoff (18 Responses)
  1. Michael

    I am not an aviation industry specialist so please excuse me if my question is naive, but wouldn't it be a good idea for JAL to downsize their aircraft sizes where necessary?

    January 19, 2010 at 6:06 am |
  2. ulysses

    Two flights a day on the same route that are around 50% full. Do they need to hire a mathematician to figure out what to do? Hint: They don't need a smaller plane.

    January 19, 2010 at 7:08 am |
  3. inaka_rob

    your not naive, but he address that fact in the article. The government doesn't want to. This is typical Japanese behavior. The odd thing is that with the new party now in power, we have seen a lot things change. They stopped a lot of civil projects that were deemed pointless and a waste of money. I am surprised Hatoyama-san hasn't done anything with JAL. I am not an expert in politics, Japanese or American, but I think this new Japanese administration came in with all these big ideas. Laid them on the table right off the bat, has nothing else new, and now then things are going to return to the usual way of Japanese Politics. Absolutely nothing gets done.

    January 19, 2010 at 7:16 am |
  4. Michael Snyder

    I lived in Japan for two years, and I can say that JAL has always been the most expensive carrier when compared with other airlines. For example, when I'd fly from Sapporo to Mimanbetsu, Hokkaido, the flight was almost always half full. I NEVER flew JAL to Tokyo, because they were always the most expensive carrier. Same with my flights between Sapporo-Tokyo-USA.

    This company has serviced non-profitable routes for 20+ years due to Japanese (LDP) pressure, so it's no wonder that the airline has finally become insolvent.

    If Japan is to wake up to economic realities, it must start to realize that JAL is a bankrupt, loss-making company... Just like many of the country's banks and heavy industries. It's time for the nation to realize the economic realities of the rest of the world.

    Japan: stop subsidizing loss-making businesses. It's time to globalize and open up to the rest of the world – no matter how painful that might be. Foreign ideas are not bad ideas. They exist as options that can help make you succeed – if the right people are listening.

    January 19, 2010 at 9:04 am |
  5. tom-k

    As was stated in the article, JAL has been exploited extensively throughout their history. Their routes and fleet policies are twisted by political agendas, so JAL cannot make decisions just on efficiency. It's like, the national government makes a foreign policy promise to a developing country to strengthen ties, and a regular flight to that country is added to the schedule, regardless of the demand. Or a prefecture in Japan builds an airport (even though their next door neighbor has well-functioning one), and flights are added to the schedule. Purchasing planes are also used to offset the trade balance to avoid tension. Employee attitude has been tainted by this history; they are not motivated to be efficient and make money.

    The Japanese government has to make the decision; either take full responsibility and support the airline in full, or totally let go and let free economy take its path (like a partnership with Delta). Even so, JAL would need to kick out all the unmotivated and get some one charismatic (like Carlos Ghosn) to change the attitude within. Not an easy task.

    January 19, 2010 at 9:11 am |
  6. yumi

    Having worked for JAL as a cabin crew, I found it very predictable that JAL ended up in bankrupcy. A decade ago, I was paid as much as $5000 a month in spite of the fact that the bubble economy had burst.
    Cost cut and downsizing must be a priority, however I suppose that it's too late. Its tainted images could keep passengers away from the national flag.

    January 19, 2010 at 9:15 am |
  7. Andrew

    Re:ulysses

    Actually the mathematican will figure it out wrong (as have many airline managers, that's whiy so few ever make money). Many of the passengers of the morning flight will need the evening one to return, merging the two into one will result in much fewer passengers. Yes, a smaller plane may be the answer, but also you need to consider what will the plane (and the crew) do for the rest of the day, as two short flights a day will not fill available time. It is a very complex equation, notoriously hard to get right.

    January 19, 2010 at 2:32 pm |
  8. Edgar Loo

    JAL bankcruptcy is nothing i didnt Expect.

    JAL Airplaines are Huge.
    Ive been in some trips in Japan, and even when economy was good,
    Domestic flights where 50% becouse they mostly use 747 planes.

    If they planned better and Chose bussiness over technology pride.
    Results would be diferent.

    Anyways JAPAN goverment must do something.
    JAL is the only Airline in Japan that fully covers domestic flights
    ANA is not enough.

    With out JAL Japan can go back to the 1900 century in some parts.

    January 19, 2010 at 3:02 pm |
  9. Ed

    Management and vision are obviously lacking. Well, If JAL throws in with Delta they are fools. Since Delta already has hubs and routes in Seoul and Tokyo, the will bleed the seats off the JAL routes, fill the Delta flights and leave JAL to atrophy and wither.

    Just ask Northwest!

    January 19, 2010 at 3:41 pm |
  10. Chief Oracle Officer

    Oh boy, JAL went down like kamikazi....

    Who's next?

    January 20, 2010 at 3:25 pm |
  11. AML

    It's so typical! Sad but typical Japanese style.

    The bigger problem is if you ask the folks at JAL, in executive positions, they would not assume any responsibility for their companies failure, admit fault in their mismanagment of the company or acknowledge that they have zero efficiencies in place. Instead they will just continue to keep on keepin' on. Shameful!

    January 21, 2010 at 10:59 pm |
  12. Poor English writer,sorry

    The reason why Japan Airline go bankrupcy is, as already mentined, that it neglect to make efffort to cut down expenditure. We misunderstand that JAL is excellent company worthwhile of receiving high wage. Although the works in airplane is very hard, Japanese young lady wishes to work there because it has been status symbol for many female. But everything changed.
    Now we know now many stewardess is not formal employee of company. Whennever we are board, we admire unbelievable attitide
    of stewardess. They are very polite, smart and beatiful. Do you know
    the fact taht many professional baseball star marriged JAL's
    stewardess? In fact, they are beatiful and smart. Good service is important, but it is not necessary for Airline any more.
    We prefer lower cost and bigger chair to the smile of stewardess.

    January 23, 2010 at 3:24 pm |
  13. vishnada

    Have flown NRT/SIN operated by JAL as codeshare of AA flights. Great service in the economy class and deluxe cabin. JAL terminal counter staff is very reluctant to give complimentary upgrades to AA plat or exec.plt customers or for that matter OneWorld customers. JAL staff bends over backwards for all nationals and treats them with politeness. However, once a fellow frequent friend from HKG descent told me, "JAL operates only for the old Japanese business men ! Just surprised the executives of the JAL lead them to chapter 13 and milked the company coffer with huge bonuses. Hope they recover quickly.

    January 25, 2010 at 4:51 am |
  14. mike EE

    i hate to but can't resist to speculate on the knockdown effects of this bankruptcy. For a start someone has to be willing and able to ofload some planes from JAL. Japan's economic partner USA is going to lose some business since Boeing won't sell fast enough to JAL; on the other hand, another aircraft manufacturer may step up with better (and cheaper) planes for everyone.

    January 26, 2010 at 3:00 pm |
  15. Joe

    I boarded a flight from Tokyo to GuangZhou China on JAL. I wanted to check an extra bag and of course pay for it. The smiled kindly and said that will be $900. I explained that I don't want another ticket, just another bag. "That will be $900". The cost was based on some crazy mathematical equation taking into account the cost of my ticket and fare class. If I were flying business class it would have been $1800 for that extra bag.
    Reasoning with them was pointless. "those are the rules", "those are the rules", "those are the rules". Get it. Typical Japanese. They can't go bankrupt sooner in my opinion.

    January 27, 2010 at 4:06 pm |
  16. Wes

    I don't believe you Joe. I checked in a extra bag on a flight to Beijing on a discounted economy ticket. I paid $100.

    There is problems in the airline, but sensationalism and trying to bash Japanese is stupid

    January 28, 2010 at 11:17 am |
  17. eddy

    man...good thing the usa government doesn't think like that...if not american airlines would be the largest company in the world....by far..

    February 23, 2010 at 5:46 pm |
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