Most Asian airlines have concentrated on costs to survive the region's doldrums, but Japan's airlines, facing new low cost domestic rivals, are looking at both international costs and revenues in an effort to boost profits.
Japan Airlines (JAL) and All Nippon Airways (ANA) have both taken the bold step of raising overseas fares in business and first class. Betting that higher fares will not cause more slippage from the front to economy class cabins, they plan a 5% increase on European routes and a 7% increase on transpacific effective from the start of April.
"First class or business class will accept this modest increase," predicts JAL, which adds that new seats, more amenities, and better service justify the boost. Both airlines believe demand is inelastic enough on long-haul routes that passengers will pay the extra. Some analysts remain sceptical about raising any fares during a recession.
On the cost side, ANA is mulling whether to follow Japan Air Systems (JAS)in transferring some international routes to a subsidiary. JAS made that move last October, when it shifted some routes to Harlequin Air, a JAS subsidiary that hires some foreigners, pays lower salaries, and has more flexible work rules. Japanese labour laws allow companies to transfer work to subsidiaries to bypass entrenched unions.
ANAhas been mulling such an option for some time, having pledged to consider any option to reduce cost. If it decides to make this move, it would shift all overseas flights out of Osaka/Kansai to a subsidiary. One candidate is its regional subsidiary, Air Nippon. It is more likely, however, that ANA might revive World Air Network, a charter it operated from 1990 to 1995. The aim would be for World Air Network to hire lower paid foreign pilots and cabin crews.
Source: Airline Business
