LIFE AFTER SQ006 - Orient Aviation

• JAL itself operating domestic trunk routesand international intercontinental routesusing large aircraft such as the BoeingB777 and B747.• JALways handling low yield internationalresort routes, with flights to holiday destinationssuch as Guam and Hawaii.• JAL Express (JEX), Japan Transocean (JTA)and J-Air taking over all regional domesticroutes more suitable for smaller aircraft.JEX, based at Osaka’s Itami airport, willincrease its fleet to six B737-400s in Marchand will eventually take over all domesticB737 and B767 flying. While it is not in thecurrent plan, neither Kaneko or JEX presidentToshio Yoshido are ruling out the possibility ofshort-haul international services.“The establishment of JAL Express isaimed at having it operate smaller aircraft so ifthere are any suitable short-haul internationalroutes for JEX to fly that is a possibility,” saidKaneko.JAL’s cockpit crew pay structure is basedon large aircraft operation. JEX, with operatingcosts around 20% lower than JAL, allowscompetitive operations on lower demandregional routes.“Cockpit crew costs are much lower. Werecruit directly. We have our own pay scale,which is lower than the JAL scale. JEX cabinattendants have to clean the cabin betweenflights. Cockpit crew include Japanese andnon-Japanese pilots,” said JEX boss Yoshido.Maintenance support is provided by JALand JTA. The end result is a no-frills, economicoperation.JAL’s own fleet is being rationalised.Seven types – too many for an airline with150 jets – will be reduced to five. Its MD-11swill be sold by 2004 and the DC-10s retired by2005-06. When all the B737s join the JEX fleet,JAL’s aircraft types will be reduced to four andthen three if the B767s go the same way.New types to be considered includethe Airbus A380 or the Boeing B747 stretch.Kaneko said the A340 and A330 are also possibilitiesfor JAL.There has been major restructuring in thefinance and accounting divisions. There are 70of the 88 group companies working in the JALfinance centre. There are 46 companies in thegroup accounting centre.Several catering companies in the JALGroup are also being consolidated.Self-supporting independent businesseswithin JAL face a different future. JAL is nolonger interested in owning hotels, saidKaneko. “JAL Hotels is now a managementcompany with some 53 properties worldwide.It’s management expertise and the linksJapan Express (JEX): to take over JAL’s domestic B737 and B767 routesA man of words – and actionWithin weeks of becoming JALpresident Isao Kaneko told OrientAviation “speedier management”was the way ahead for the airline, hesaid. Quick thinking was the name of thegame with equally quick decision-makingneeded from board level down.Kaneko promptly put his words intoaction. The board, for example, was halvedto 15 members.The son of a railwayman, Kanekostudied politics and law at Tokyo Universitywhere he was a talented basketball coach.At one time he had ambitions to become ajournalist. He eventually opted for a moresecure career path in the national airline.Those who know him well say he hasa great ability to manage people. He ishands-on and direct.His business philosophy is revealing.Kaneko quotes leading Japanese statesmanMasaharu Gotoda, whose pronouncementsinclude “don’t hesitate to accept responsibility... be prepared to stretch beyond yourlimits” and “once a decision has been taken,follow it without hesitation”.He also quotes GE chief Jack Welchextensively. Control your destiny, or somebodyelse will; face reality as it is, not as itwas or you wish it to be; be candid witheveryone; don’t manage, lead; changeyourself before you have to; and, if youdon’t have a competitive advantage, don’tcompete.At JAL, Kaneko insists on transparency.“We are accountable to the public,our shareholders, our customers and ouremployees. As a public transport company,we must be open in our actions.”These are no hollow promises. As chairmanof JAL’s Flight Safety Board Kaneko,who often attends crew meetings andpays regular visits to the shop floor, hasinstructed the airline’s safety record bepublished daily on the Internet. “If there hasbeen any irregularity in flight operations,people can read what happened,” said thepresident.with JAL are an attractive package for hotelowners. It’s good business and there are plansto float it on the Tokyo Stock Exchange, possiblyby 2003-04,” he said.JAL Trading, a general trading subsidiaryoriginally set up as a procurer of goods for theairline, also is capable of standing on its owntwo feet, added Kaneko. With a diversifiedportfolio of business interests, ranging fromaircraft acquisition to wines and spirits importation,it is earmarked for flotation this year.JAL Infotech, the carrier’s informationtechnology (IT) subsidiary, has formed apartnership with IBM. It will develop its ownbusiness activities as well as providing JALwith IT support.The national carrier plans to continueco-operating with local rivals in cost-savingareas.For example, Japan’s three major airlinesstarted a joint shuttle service between Tokyoand Osaka. They are going to establish acommon airline web site (Kokunaisen.com)in the spring.Kaneko said the carriers had an agreementto share spare parts for the B777.“We also can develop common self check-inmachines at airports, something we are doingat the moment with Japan Air System,”he said.March 01 | Orient Aviation | 35