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Should JAL be saved?

25 Comments
By Henry Hilton

The impending bankruptcy of Japan Airlines is a highly unwelcome challenge for the newly inaugurated Hatoyama cabinet. The extraordinary financial tsunami that has engulfed JAL shares in the past week leaves the government with a nasty dilemma.

Public opinion is understandably unsympathetic to the idea of any big bail-out by the taxpayer. Given the stories of union-management strife, overstaffing and freebies by senior executives that go back decades, this is hardly the kind of background on which to launch a major rescue effort.

JAL's reputation may be in tatters but saving what was once a national icon will have its diehard supporters in the Democratic Party. Yet, it is one thing to wave the flag and claim that JAL should not go to the wall, but quite another to cobble together a practical solution. It is going to take both political skill and freight loads of cash to keep JAL in the air.

To save or not to save used to have only one simple, instinctive answer. Since the new government has vowed to cut unnecessary expenditure, many will obviously wonder why JAL is particularly deserving of the special kid-glove treatment. The international airline industry is experiencing hard times everywhere and with the budget-firms likely to keep gaining customers as the recession continues, saving JAL could mean merely staunching a wound that is bound to reopen again.

The initial indications of a possible JAL fix are far from promising. Comments that it can all be solved through a special task force hardly inspire total confidence. Talking of calmly working things out through negotiations is not exactly what the nation's hard-pressed electorate had in mind when it overwhelmingly gave the green light to Yukio Hatoyama's men and women.

The skeptics will want to learn - and soon- what can realistically be salvaged from the mess. The extraordinary plunge in JAL's share price ought to be sending the transport ministry and the special advisers a pretty clear message. If JAL gets its bail-out, it may well be asking in the future for more of the same. If the European model is anything to go by, massive state aid for poorly performing industries is usually seen as no more than the first in a dreary series of bail-outs. The begging bowl has a habit of being passed round repeatedly before the process ends up with a permanent charity.

All this bad news, though, should not disguise the fact that even now, JAL can still get some things right. Flying last weekend from Narita to Heathrow by JAL showed me that its long-haul flights can still compete successfully in terms of cost and service. Jam-packed in may have been at the back, but this did not prevent excellent, attentive service.

If JAL were able to consistently treat its customers as more than just bodies to be flown from one airport to another, then there is just a case for saving portions of the carrier. However, this ought to be contingent on a management cull and renewed talks with other airlines overseas on a possible merger. Leaving JAL as a sacred national treasure won't do any longer.

© Japan Today

©2019 GPlusMedia Inc.

25 Comments
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Let Virgin save JAL.

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Bail it out, but then have the DPJ run it from then on. Fire the senior executives, who are largely responsible, and replace them with fresh, new, business-oriented, uncorrupted minds.

It's given that JAL will need more bailouts in the future, and the special task force will be 99.9% ineffectual.

It's also given Japan won't let another company save or buy JAL, so to save the tax-payer and potentially MAKE money and jobs from changes, the government should take control, if only for awhile until this national treasure can once again be independent

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government doesn’t care about profits because the only money it's in fear of losing is the taxpayer's. Gov't business is an oxymoron

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Likewise, private business has been less than stellar. What have the shareholders been doing? Merely letting management take their current course?

An Australian insurance company will not insurance cancelled JAL tickets which is a signal from the market about the company's future.

However, the Ministry of Transport has made comments that it WILL bail out JAL.

Japan is a an important hub and the expansion of Narita and Haneda offer JAL an opportunity to secure quite a few slots. Their routes need to be rationalised quickly to compete for these slots.

To remain viable JAL needs to trim 30% from costs to be able to meet the market ticket pricing. About 7,000 jobs will be trimmed but more will need to go.

If Delta or AA take an interest in JAL maybe they will have the fortitude to restructure and turn things around. The solution has to be painful.

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Up to the time ANA was permitted to fly international routes, JAL had a captive market. If it's deeply in the red it's because it was the like Aesop's grasshopper, fiddling merrily away instead of putting aside victuals for winter. JAL's grasshoppers caroused in expensive Ginza clubs with Ministry of Transport bureaucrats and then hired the retiring bureaucrats as directors, advisors and auditors, naturally with perks like their own drivers, free travel and fat retirement bonuses. JAL piddled away horrendous amounts of money and bled its coffers white. Now the cupboard is bare. It's doubtful any lessons have been learnt from all of this. If times were to get better, they'd probably do it all over again.

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Bail them out! Imagine how the service becomes if they'd merge with Delta!!

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I wish the gov't would send a contract to each taxpayer, asking each person if the gov't could buy a company with a portion of their money. And if it didn't go well, well then the gov't would have to tax that person more to make up for the losses. And if it went well, then the taxpayer would pay less money. I wonder how many people would sign that contract...

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If JAL goes down, many satellite companies go down as well. I guess it's the reason they keep feeding the monster. They should downsize it to give satellite companies time to recycle or disappear, cancel many Boeing orders to suit the new situation, then finally keep 2 or 3 jets for museums. I like their service but everything has an end.

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Merging with Delta would never work. Where would JAL find enough fat old stewardesses?

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http://www.youtube.com/watch?v=WYSZ8TUa3Vg

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Yes. JAL should be saved but it needs to seriously cut its costs. Moreover, the airline itself has to be repositioned down market. For starters, instead of using such large aircraft (that are invariably half empty), JAL should consider buying a fleet of Cessnas or possibly some old Russian airliners from the Soviet Era. Cost cuts will also be necessary for cabin crew. Instead of employing these elite university graduates (who expect too much money), JAL should be competing with McDonalds for the cream of Japanese youth. If they can flip burgers and chew gum at the same time, surely your average teenager can fly a 747. At 400 yen a hour slave-labor wages, JAL's costs would come right down.

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Sending a signal that the govt will back it defintitely will keep JAL from making the necessary changes. Put it on shore...let it flop around for a while before rescuing.

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If JAL flops, ANA can't surely take over it's routes, then ANA would be in the same situation as JAL, a bit fat company that needs to cut costs.

The aviation industry is hurting. Interestingly , in the US where people complain about rail travel, the government has spent pennies on rail travel, but billions and billions bailing out the US aviation industry.

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If JAL is allowed to collapse, what foreign airline should the J-government invite to maintain competition in the domestic market?

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If JAL is allowed to collapse, what foreign airline should the J-government invite to maintain competition in the domestic market?

How about Garuda? Then they could put some of their trained Japanese-speaking nurses on board as a sales promotion gimmick.

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Why don't they sell off the inflight uniforms? They'd be in the black in no time.

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Yes, Jal MUST be saved. Its a very important company for Japan's economy.

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This conversation will become irrelevant very shortly. Check out why we cannot go flying around like we do for much longer. In the meantime I agree that the Government should bail them out if they agree to stop hiring.There have been enough suicides already this year.

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Let them go. Problem is for such massive private companies in Japan, they are run so inefficiently with way too many staff, in a similar fashion to Japanese government agencies. Don't use taxpayers cash to bail out this dying monster of an airline: expose them to market forces, let them get bought out and complately restructured. Sell off their old planes to the Russians and hire only multi-lingual foreign stewardesses in the New JAL! Bring in the Filipinas, Chinese and Thai stewardesses!

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They won't be allowed to fail and they better not scrap all my mileage in the restructuring.

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YES BUT GET RID OF THE DEADWOOD IN MANAGEMENT

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How many ramp workers, support personnel, flight attendants, etc etc etc will be out of a job if JAL goes bankrupt? Where are those jobs going to be absorbed?

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Merging with Delta would never work. Where would JAL find enough fat old stewardesses?

Apparantly you've never seen the Delta safety video with "Deltalina." But yeah, we can keep the JAL flight attendants, as they are best feature of that airline. The best seat (with the best view) on a JAL 747 is the emergency exit rows, as the stewardesses sit directly accross from you facing the back of the plane.

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How many ramp workers, support personnel, flight attendants, etc etc etc will be out of a job if JAL goes bankrupt? Where are those jobs going to be absorbed?

ANA and that job handing out tissues on the street.

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flew alot last few years, ANA was far better than JAL in almost every aspect if JAL goes, will ANA try less hard?

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