ANA ready to bite the bullet(1)

All Nippon Airways chief executive Kichisaburo Nomura has pledged to step up the pace of reform at the Japanese airline as it seeks to recover from a net loss last financial year of 15.2 billion yen (US$143 million).

Nomura said ANA was positioning itself for growth and profitability. Keys to its strategy are the rebuilding of its network, including the scrapping of unprofitable routes, and continuation of the freeze on purchases of new aircraft.

ANA will also put greater emphasis on code-sharing with Star Alliance member airlines.

Although the number of passengers on ANA’s international routes rose 12 percent to four million in the year to March 31, 2000, revenues rose only four percent due to lower fares and the appreciation of the yen, which had the effect of reducing overseas revenues.

Nomura said it had been a difficult working environment but he believed the airline had turned the corner in 2000. “We made strong progress in reorganising our domestic routes to improve profitability.

“New discount fares that we introduced in the wake of fare liberalisation have successfully stimulated domestic passenger demand,” he said.

ANA is planning both to cut staff numbers and trim the wages of its workforce if unions can be placated.

ANA also intends to strengthen Haneda Airport’s role as a hub for domestic operations.

ANA will concentrate on tapping into the Tokyo-Osaka connection, on which airlines currently attract only 15 percent of the 35 million passengers who use the route each year. ANA will shift the focus of its international route strategy from scale – more flights and reduced costs through economies of scale – to quality and profitability.

“Specifically, we will continue to concentrate our international routes at Narita. Until now, we have used two hub airports for international flights, Narita and Kansai, but we will gradually reduce our Kansai flights and focus on Narita, where business opportunities will be enhanced when a new runway is completed in 2002.”

Nomura said the change in emphasis would include the transfer of some international routes to a new airline – slated to begin operations early next year – the curtailment of unprofitable routes, and the use of smaller aircraft.

He expected to reduce available seat kilometres by about 30 percent by the year ending March 2003.