All Nippon Airways slashes capacity, gears-up for 2010 ‘big-bang’

All Nippon Airways (ANA) of Japan, is planning strategies similar to their world-wide airline counterparts in these times of global recession. Suspending operations, reducing flights and switching to smaller aircraft, essentially slashing capacity to keep passenger load factors high, in an effort to keep the business going this year.

India is one of the more badly affected countries by ANA’s re-alignments. It used to operate a 38 seat all business class Boeing 737-781ER Business Jet between Mumbai and Tokyo Narita thrice a week. This will come down to twice a week. ANA also has a code share arrangement with Jet Airways and transits passengers via Singapore.

Talking about the Indian operations, Kenji Sugino, Director – Sales, Administration and Marketing, ANA said

“Despite the global slowdown, India is one of the growing markets for ANA. We are positive about this year and are expecting good load factors and sales margins. We are going to play strategically in the Indian market this year.”

“We were receiving a good 60-70 per cent of passenger load on Mumbai – Narita route. Post 26/11, ANA is receiving about 30 per cent loads on Mumbai – Narita route. Now, the loads are about 50 per cent, but due to recession, it’s not logical to operate flights half empty. However, the reduction of flights on Mumbai – Narita route is temporary and will be rescheduled once the market demand goes high. We are positive about this year and assume that the market will stabilise by mid-2009.”

76 seats for a population of 1.1 billion ??? In my opinion, both Japanese and Indian carriers are just handing over business to ASEAN carriers by their lack of capacity.

ANA has also rolled out strategic plans for its worldwide operations announcing it will slash nine per cent of its international service in the next fiscal year (April 2009 to March 2010). It will withdraw the Boeing 747 service on the Tokyo – Paris and Tokyo – Frankfurt routes, and will introduce smaller aircraft on the Washington route.

ANA is looking to the first quarter of 2010 when, as launch customer, it will receive its long awaited Boeing 787 Dreamliner.

Unlike rival Japan Airlines (JAL) whose traditional focus is on international operations from Tokyo Narita airport, ANA has always put Tokyo Haneda and domestic business first; and it is gearing up to take full advantage of the huge business opportunity expected by the massive expansion of Haneda and Narita airports in 2010 – described by ANA President and Chief Executive, Mineo Yamamoto, as the ‘Big Bang’ for Japanese aviation, coupled with deliveries of the Dreamliner.

For now, financially, ANA expects a group net loss of JPY nine billion ($ 100.4 million), instead of a previously projected profit of JPY 17 billion. ANA also slashed its group operating profit forecast from JPY 55 billion to JPY eight billion.

Tomohiro Hidema, Executive VP of Finance, ANA stated in a media release

“Given the likelihood of the situation worsening in the foreseeable future, we are faced with an operating environment vastly different from the recent past, one that offers challenges of a much harsher nature.”

The Japanese airline industry have already asked their government for financial aid.

Read the ANA press releases detailing their business plans and their financial results.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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