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Demand Disappoints After Japan Airlines Adds Flights at Tokyo Airport

Jun 03, 2014 4:00 am

Skift Take

The supply glut and lack of demand will result in competition and lower airfares for all airlines at Haneda, which is great for flyers and terrible for aviation stakeholders.

— Samantha Shankman

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Toru Hanai  / Reuters

Japan Airlines aircrafts are parked on the tarmac at Haneda Airport in Tokyo February 4, 2013. Toru Hanai / Reuters


Japan Airlines Co. said the release of new operating slots at Tokyo’s Haneda airport has created a capacity glut that’s likely to persist for another 18 months, weighing on average fares and earnings.

“There was a large increase in the supply, and demand has not kept up at this point in time,” Chairman Masaru Onishi said today in an interview in Qatar. “The same happened for international flights. Hence we believe that for this fiscal year, business will be a little difficult for us.”

Excess flights at Haneda, which handles the bulk of Japan’s domestic and short-haul services, come as JAL seeks to improve its financial position after emerging from bankruptcy protection in 2011. The airline is “financially healthy” but will focus on improving its cash position and credit rating before boosting shareholder returns, Onishi said.

“When we are strong enough financially, we may increase dividends,” he said at a Oneworld alliance event during the International Air Transport Association annual meeting in Doha.

JAL is evaluating network expansion as it continues to take deliveries of the Boeing Co. 787, which has been a “game- changer” for the carrier, Onishi said.

The company will begin considering a requirement for smaller regional jets and propeller-drive planes in the “near future,” he said. JAL has about 10 Saab AB 340B turboprops.

To contact the reporter on this story: Deena Kamel Yousef in Dubai at dhussein1@bloomberg.net To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.

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