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HOME  > Past issues  > 2009 October 7 - 13  > Why has Japan Airlines run into financial difficulty?
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2009 October 7 - 13 [ECONOMY]

Why has Japan Airlines run into financial difficulty?

Sunday edition, October 11, 2009
Japan’s flagship carrier Japan Airlines (JAL) is facing a financial crisis. In the background, there has been undue U.S. pressure in addition to lax aviation works projects promoted under the previous Japanese government mainly led by the Liberal Democratic Party.

“JAL’s massive losses are coming from outside its original business, flight operations. For example, it embarked on a hotel resort business and development of recreation facilities, but failed,” said Yamaguchi Hiroya, chairman of the Japan Federation of Aviation Workers’ Unions (JFAU).

He also said, “Even in its core business, JAL has to deal with lots of unprofitable domestic flights and this presses management.”

The reason why JAL runs so many unprofitable flight routes is that the LDP government had forced JAL to open new routes in accordance with the construction of new airports, though they were incapable of attracting as many customers as the government had forecasted. There are now 97 airports in Japan, and many of them have stayed in the red.

Land and Transport Minister Maehara Seiji of the new government, consisting mainly of the Democratic Party of Japan, also pointed out that the previous government is largely to blame for JAL’s business failure because it pushed ahead with its unsound projects to construct many local airports.

U.S. pressure lies behind the rush for airport construction in Japan. Using Japan-U.S. trade friction during the 1980s as an excuse, the U.S. government in the 1990 Japan-U.S. Structural Impediment Talks demanded that Japan work out a public investment program of 430 trillion yen (later revised to 630 trillion yen).

Subserviently, Japan complied with this U.S. demand and constructed such airports as Kansai International, Central Japan International, Hiroshima, and Kitakyushu based on excessively high demand forecasts.

More airports and more flight routes in Japan enabled the U.S. aviation industry, including Boeing, to sell more of their aircraft to Japan. This must have been the true purpose of the United States.

JFAU President Yamaguchi said, “In addition, deregulation promoted by the previous government has contributed to intensifying the low-price competition even on cash-cow routes, and this further weighed on JAL flight operations. However, in the first place, an airline company should place priority on flight safety as a public transportation service. To restore its business, JAL should not discard its personnel, the key to defend flight safety, and not simply pull out from the unprofitable routes.”

Means of transport, including Shinkansen (bullet train), expressways, and airports, are currently handled separately. The Japanese Communist Party calls for a comprehensive public transport policy in order to reduce deficits and wasteful transport capacity.
- Akahata Sunday edition, October 11, 2009
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