Bloomberg News

Japan Air Sees ‘Very Long’ Wait for U.S. Sales Rebound on Quake

June 05, 2011

June 6 (Bloomberg) -- Japan Airlines Co., the nation’s biggest international carrier, said ticket sales in Europe and the U.S. were lagging behind forecasts and would take a “very long” time to recover from the March 11 earthquake and tsunami.

“The recovery of demand from Europe and North America has not met our expectations,” President Masaru Onishi said in an interview in Singapore yesterday, ahead of the International Air Transport Association annual general meeting. “We feel it’s going to be a very long, drawn out and slow recovery.”

JAL and overseas carriers including United Continental Holdings Inc. and AMR Corp.’s American Airlines cut Japan flights after the March 11 earthquake as concerns about radiation leaking from a crippled nuclear plant north of Tokyo deterred visitors. Business travel in Japan has rebounded and local tourists have also resumed making overseas trips following a drop-off after the disaster, Onishi said.

“We are very optimistic that the next peak season, the coming summer and especially July and August, will meet our expectations,” he said. “Japanese outbound tourism demand has almost fully recovered,” he said citing the Golden Week holidays in April.

The carrier’s traffic in the holiday period fell less than it initially expected, with international passenger numbers dropping 31 percent from a year earlier and domestic travel declining 25 percent. Passenger numbers have fallen this year as the carrier cut capacity and shed planes while restructuring operations in a court-led turnaround that ended in March.

787 Deliveries

The unlisted airline is renovating its fleet by adding 35 on-order Boeing Co.’s 787. The planemaker is due to begin deliveries of the Dreamliner to first customer All Nippon Airways Co. in August or September, ending more than three years of delays.

JAL plans to use the fuel-efficient 787 on long-haul routes and to add new routes that wouldn’t support a large aircraft such as Boeing 747. It has announced plans to begin a Tokyo- Boston service using 787s in April.

“We view this aircraft as the optimum, not only for long- haul routes, but also for routes where demand is not as high as it could be, more like medium-level demand,” Onishi said.

The airline is offsetting the cuts in its staffing levels and fleet during restructuring by bolstering cooperation with partners. In April, it formed a venture with American Airlines to operate flights across the Pacific. The earthquake and subsequent travel slowdown on U.S. routes has made the success of the venture hard to measure, Onishi said.

JAL plans to seek similar ventures with carriers in Europe and Asia, he said. The airline is a member of the Oneworld alliance, along with American, British Airways, Cathay Pacific Airways Ltd. and Qantas Airways Ltd.

--With assistance from Liza Tan in Singapore. Editors: Neil Denslow, Neil Western.

To contact the reporters on this story: Robert Fenner in Singapore at rfenner@bloomberg.net; Chris Cooper in Tokyo at ccooper1@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net


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