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ANA, JAL to slash routes, increase fuel surcharges

Date Posted: 2008-08-15

Surging fuel prices are sending executives of both All Nippon Airways and Japan Air Lines back to the calculators and drawing boards, looking for ways to curb rising costs that are killing profits.

All Nippon Airways says it will slash 11 international and domestic routes in coming months, including flights between Nagasaki and Okinawa. Japan Air Lines has announced it will either suspend or cut 19 international and domestic flights starting in Fall. JAL has indicated it will not cut any Okinawa routes.

ANA’s Nagasaki-Okinawa service will be suspended next February 1st. Flights between Kansai International and Guam will be suspending January 13th, while Chubu to Taipei service will end October 26th. ANA domestic routes between New Chitose and Sendai will be cut to three daily flights, as will service on eight other routes. ANA says the daily round trips between eastern Hokkaido’s Memanbetsu and Kansai International will be dropped to only summertime flights.

JAL says it will drop international routes between Fukuoka and Shanghai, Chubu International in Aichi Prefecture and Busan, South Korea, and the Kansai to London service. JAL’s announced domestic cutbacks—12 routes suspended and service on four routes reduced—include Kansai-Sendai and Chubu-Fukuoka flights. Reduced service will be implemented on Kansai-Sapporo and Kansai-Fukuoka routes.

Rising oil prices are blamed for the cutbacks at both airlines. The decisions were made as oil cost $141 per barrel, double the $79 price a year earlier. ANA predicts its fuel costs this year will exceed ¥300 billion, ¥40 billion more than in 2007. JAL Vice President Isamu Jinguji laments “we will not be able to easily absorb such radically high oil prices” without significant changes to company operations.

JAL struggled with a quarterly net loss of ¥3.4 billion, down nearly 20% from last year. It says, though, that its operations are moving toward the black once more, despite a six percent drop in sales. Mie Akiyama, an ANA spokeswoman, says the airline is not considering further changes this year, noting “we can only hope that fuel prices will go down soon.”

Both airlines have hefty fuel surcharges in place, ranging from ¥500 to ¥32,000 per ticket on JAL to a typical high end ¥28,000 charge for its international flights to Europe and the United States.

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