Japan Travel

* * * * * * * * TERRIE’S (TOURISM) TAKE – BY TERRIE LLOYD * * * * * *
A bi-weekly focused look at the tourism sector in Japan, by Terrie
Lloyd, a long-term technology and media entrepreneur living in Japan.

Tourism Sector Edition Sunday, March 01, 2015, Issue No. 794

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+++ JAL is Worth Flying Again

Because of a consulting job in the USA this last week, I had a chance to
fly JAL. It’s been years since I’ve traveled on the nation’s namesake
airline, mostly because I didn’t like the food, the rigid service, nor
the tiny seats they crammed us into on Economy class. So I was curious
what the “new” JAL would be like. The work I was doing was in Boston,
and in fact the only direct flight to that city is with JAL, which is
how I came to be on flight JL008.

Firstly, my impression of JAL this time around wasn’t bad at all. Prior
to returning I’d loaded up with sour dough bread, cheese, cereals, and
other goodies that are super-expensive in Japan, and realized I couldn’t
get everything into one bag. Then checking on JAL’s website I found that
even if the ticket originates in Japan (and this never used to be the
case) I could fly with two 23kg bags. In fact, this two bag allowance
for Economy seems to be something that other Japanese and US airlines
(e.g., ANA, American, United) have been offering since the start of this
month (American was some time last year) — nice to know if you have to
go to the U.S. soon.

Even with the second bag, I still had a bit of overflow, and at the
check-in counter I offered the excess groceries to the staff. Instead of
accepting them or telling me to throw them away, which would have been
the normal response, the JAL ticketing lady offered to box them and ship
them separately for me. I was really impressed. The extras not only took
me a bit over my overall weight allowance, there was of course the extra
work and cost of boxing it as well. “Thank you” to JAL’s Boston ground

—————— ICA Event – March 26th——————-
Speaker: Wayne Kirk Schmidt – CEO, ChangeIS K.K
Title: “Electric Haystacks, Digital Needles: The Art of Finding Things
in the Age of Big Data “

Details: Complete event details at http://www.icajapan.jp/

Date: Thursday, March 26th, 2015
Time: 6:30 Doors open, Buffet Dinner included and cash bar
Cost: 4,000 yen (members), 6,000 yen (non-members) Open to all. No sign
ups at the door!!!!!!!
RSVP: By 10am on Monday 23rd March 2015. Venue is The Foreign
Correspondents’ Club of Japan

JAL does the Narita Logan (Boston) route with a 787 Dreamliner, you
know, the actual same JAL flight and plane that caught fire at Logan
airport because of battery problems, back in 2013. I always fly economy
and the 2-4-2 seats were sufficiently spaced apart that my 186cm frame
could fit in. Everything was relatively new, staff were courteous and
imbued with “omotenashi” in everything they did. Surprisingly, the food
was disappointing, with no Japanese signature dishes and lots of
over-cooked pasta/rice. If JAL wants to restore its image of being a
prestige airline, then even in Economy it needs to do something with the

Ever since JAL emerged from bankruptcy in 2010, the company has been on
a combination program of cost-cutting and strategic route planning. I
found it interesting when I read in the Economist back in 2012 that the
airline had decided to target direct flights to secondary airports in
the USA as one of its key recovery strategies. I guess this makes sense,
in that there are plenty of Japanese living and studying/working in the
USA, and they are quite spread out. Since that article, though, JAL has
only opened up daily routes to Boston, San Diego, and from this month
Osaka-LAX. It surprises me that just 3 routes can generate that much
additional profit.

Or maybe it isn’t surprising, since when you’re the only one it also
means you don’t have to be the cheapest. Yes, for Boston you get the two
bags, but you also get to pay JPY180,000 (today’s cheapest JAL return
fare) for the convenience of a 11-14 hour (return) flight, versus
JPY108,000 for an 18-hour two-leg flight with American. JAL is clearly
making a massive mark-up on these secondary city flights, and the
incentive of saving hours in hub airport transfers seems to make sense
to the consuming public, because the flight was full both ways, on both
weekdays and weekends.

Concentrating on North America also makes sense from the point of view
of competing with LCCs. Although the USA has Open Skies, no LCCs are yet
ready to invest in the aircraft and infrastructure they need to do the
long-haul routes between East Asia (i.e., ex-India) and the U.S. So most
of JAL’s US-bound competition is still coming from traditional
competitors with relatively similar cost bases, such as Korean Airlines,
United, Etihad, etc. This advantage will be lost as either the Asia
LCCs, or their more adventurous European counterparts, decide to try to
crack the trans-pacific market. It’s only a matter of time.

In contrast to the USA routes, the competition for business in Asia is
far greater, with multiple LCCs offering similar aircraft and services
to JAL and with prices several times cheaper. Air Asia and JetStar in
particular offer good enough planes, service, and prices to be a serious
threat. This is no doubt part of the reason that JAL cut 15
international routes (40% capacity) when it emerged from bankruptcy.

We won’t go into the controversy surrounding fairness of JAL’s rescue by
the government and subsequent humungous JPY900bn IPO in 2012. However,
suffice to say that by scrubbing the balance sheet clean of hundreds of
billions of yen in debts and pension liabilities, coupled with the
cost-cutting religion unleashed upon the airline and its remaining
32,000 staff (18,000 retired or fired) by Inamori’s team, JAL’s
financial performance has been nothing short of miraculous. Since 2011
JAL has been profitable, and in fact in 2012 was the world’s second most
profitable airline, after Air Asia.

The question is whether JAL can continue its stellar performance? Our
guess is that so long as service is as good or better than it is now,
that the long-haul routes are chosen with a focus of keeping out LCC
competition, and that it continues with its lock-hold on Japanese
corporate accounts, then it has a chance. Once the LCCs begin, though,
and we think the first challenge will either come from Air Asia or one
of the Chinese LCCs, then all bets are off. If you want to experience
the new JAL, probably now is a good time to do it.

…The information janitors/


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Written by: Terrie Lloyd (terrie.lloyd@japaninc.com)

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