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Rates lag volume increase at JAL

By control on February 4, 2013

The JAL Group, Japan Airlines' parent organization, has reported a 4.8 percent increase in international and domestic cargo volumes in freight tonne-kilometer terms for the first three-quarters of its financial year, the nine months to Dec. 31. However, revenue of 57.5 billion yen ($621 million) was 2.2 percent down on the equivalent period in 2011.

Post-quake reconstruction demand continued to drive the Japanese economy during the period, and the change of government in Japan, a weakening yen, and a rise in stock prices have all been positive factors, JAL said. But the carrier cautioned that a number of factors were "causing the outlook to remain opaque", including the slowing economies of Europe and China, domestic deflation, and strained diplomatic relations due to the territorial dispute over the islands known as Senkaku in Japan and Diaoyu in China.

International cargo operations remain sluggish both inbound and outbound, but JAL is trying to leverage Tokyo Haneda airport’s favorable location to attract shipment of perishables and express cargo. The carrier has improved connectivity between international and domestic flights at Haneda to boost shipments to and from regional Japan.

JAL opened new routes from Tokyo Narita to Boston in April, and to San Diego in December. Frequency was increased on the Narita-Delhi and Narita-Singapore routes. Offsetting this, a decline in demand on China routes forced a reduction in capacity as the diplomatic spat deepened.

Travel demand to Europe, North America and South East Asia has been positive against the backdrop of a strong yen rate. Leveraging the sales network of joint business partner American Airlines, JAL was also able to attract customers expansively from Asia and North America.

Furthermore, the numbers of individual-travelers and inbound-Japan tour groups on China routes have shown signs of recovery since November and demand in terms of Revenue Passenger Kilometer (RPK) rose 15.2 percent versus last year while load factors went up 7.3 percentage points to 76.2 percent. Both members of the oneworld member airline, JAL and British Airways started a joint business on Oct. 1, 2012 to provide better links between Japan and Europe and to create more customer benefits in terms of products and services, such as offering codeshare flights between Tokyo (Haneda and Narita) and London (Heathrow), and selling aligned fares.

JAL and Malaysia Airlines, which joined the same alliance on Feb. 1, 2013, began a codeshare partnership in July last year between Japan and Asia. This partnership will benefit customers by offering smoother connections between Asia and the Middle East via Malaysia Airlines’ primary hub in Kuala Lumpur, and will benefit both carriers as well with business opportunities to tap new demand.

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