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