Japan's beleaguered airlines are cautiously optimistic as profits surge, but they may face a dangerous domestic price war that could damage overall recovery in 1995.
For the first time since the late 1980s the indicators are positive, with Japan Airlines, All Nippon Airways and Japan Air Services all in the black, albeit with modest returns.
International traffic is showing the strongest growth, while the domestic market remains sluggish, and is regarded as the key to overall recovery. However, analysts believe growth could be killed by a round of domestic fare discounting early in 1995.
From December 1994, as part of the government's liberalisation moves, the procedure for setting domestic discounts was changed; airlines need only file discounts with the transport ministry rather than submit them for prior approval and discount levels have been expanded to 50 per cent.
At presstime, none of the carriers had started discounting as they investigated new products to stimulate domestic travel demand. 'Obviously, we hope to begin marketing the new products as soon as possible,' says ANA.
With JAL and JAS heading along the same path the scene has been set for a marketing discount battle in Japan's domestic skies. But the airlines remain cautious about plunging too deeply into a fare war for fear of boosting traffic at the cost of yield.
As improved statistics for 1994 came in, airline officials were showing signs of optimism. ANA was bullish and JAL's president Matsuo Toshimitsu was elated at JAL's first six monthly profit in six years. 'I feel relieved for the first time since I became president four years ago'.
As improved statistics for 1994 came in, airline officials were showing signs of optimism. ANA was bullish and JAL's president Matsuo Toshimitsu was elated at JAL's first six monthly profit in six years. 'I feel relieved for the first time since I became president four years ago'.
Source: Airline Business
