Paul Lewis/SINGAPORE
Japan Airlines (JAL) has launched its new low cost subsidiary, JAL Express (JEX), in an effort to counter the country's crippling high labour costs and in response to the impending entry into the domestic airline market of the first of several planned start-ups.
JEX launched its inaugural twice-daily services from Osaka's domestic Itami Airport to Miyazaki and Kagoshima on Kyushu Island on 1 July, using two Boeing 737-400s leased from parent carrier JAL. The airline is targeting a minimum 20% cut in costs on the two secondary routes previously served by regular JAL flights.
The airline has reduced overheads by hiring non-JAL and non-union cockpit crew from Park Aviation, including foreign nationals, and cabin attendants on a short-term three-year contract.
The cabin staff, who have been re-termed JEX's "sky cast", will also perform functions on the ground, including aircraft cleaning.
"If we had started as JAL, we would have been forced to pay existing salary scales, but with non-JAL staff, we can start as new," says the airline. JAL hopes savings will translate into improved earnings on its low- and medium-density domestic routes after a 94.2 billion yen ($660 million) loss for the 1997 financial year ending 31 March.
In the longer term, JEX plans to expand beyond its Itami base and operate on trunk routes, such as from Tokyo to Osaka-Kansai and Fukuoka, once a long-awaited second runway is completed at Narita Airport. The airline is also looking at short-haul international flights from other Japanese regional airports to South Korea.
"Productivity is the key: we need to be more cost-competitive," says JAL, which envisages JEX growing to between 15 and 20 aircraft in the period 2005-2010, including widebody Boeing 767s. Technical support will be provided by JAL and its 51%-owned Okinawa-based subsidiary Japan Transocean Airlines.
Local newcomer Skymark Airlines, meanwhile, is planning to launch its first services in September using a leased 767. A second start-up, Hokkaido International Airlines, which trades as Air Do, is due to start services from 30 October and has just taken delivery of its first aircraft, a new 767-300ER.
Source: Flight International
