JAL mulls pullout from region

Japan Airlines has indicated plans to pull out or—at the least—reduce the number of its flights to Saipan and Guam due to rising operational costs, Commonwealth Ports Authority executive director Carlos Salas disclosed yesterday.

Salas said JAL was expected to issue an official notice regarding the plan by June or July.

In the meantime, the CNMI government should pull together to come up with a solution to keep the carrier on Saipan, he added.

“JAL is experiencing a lot of losses, mainly due to the high fuel prices. They’re planning to address these losses by suspending flights to Saipan and also to Guam. What this means, of course, is they’re looking at routes where they can generate more income to recover their losses,” Salas said.

He described JAL’s plan as “another hit” to the CNMI’s tourism industry, which has already been experiencing declining arrivals from Japan.

JAL’s 14 weekly flights from Tokyo and Osaka are very important to the local industry, he noted. Currently, JAL provides daily flights from Narita and Kansai. Every so often, the airline also offers charter flights to Saipan.

The port official also maintained that, while fuel prices were beyond the Commonwealth’s control, the government could do something to address the islands’ profitability as a travel destination.

“That’s what’s going to be done this coming week. The [Marianas Visitors Authority], CPA, and hopefully, the administration will all come together and figure out a way to change the mind of JAL and keep the flights intact to Saipan, Salas said.

Yoichi Matsumura, general manager of Pacific Development Inc., one of the major travel agencies in the CNMI, agreed with Salas that JAL’s reported pullout would have a significant impact on the Commonwealth economy.

“More than 50 percent of the Japanese tourists that visit the CNMI take JAL flights. The CNMI will have a very serious problem if JAL pulls out,” said Matsumura. “But I understand that JAL’s plan is not final yet. So there’s still room for the people of the CNMI, not just the Japanese community, to try to make JAL change its mind.”

Matsumura, who also serves as member of the MVA board of directors, said the government’s tourism agency might hold a special meeting today to discuss the JAL issue.

Gov. Juan N. Babauta, for his part, said the CNMI would be more like “a victim” if ever Japan Airlines pushes through with plans to pull out its service in the region.

“The CNMI is a victim in this situation. Due to the rising cost of fuel, JAL’s international flights are impacted. They said that it’s just not economically feasible to maintain international flights,” said the governor in an interview.

He said JAL representatives met with him on Thursday—after he delivered his annual State of the Commonwealth Address where he expressed optimism about the CNMI economy and Japan market in particular.

Babauta said, though, that the possible pullout of flights “is a world-wide phenomenon.”

“It’s not just the CNMI. Other regional destinations are affected,” he said.

He said that JAL did not specify what exactly would take place—whether it is flight reduction or total pullout of flights.

But he said that any major change would happen sometime in October this year.

Sources from the Japanese community said that JAL would stop its operations altogether in the CNMI and Guam.

Babauta said he would not want to see the departure of JAL.

“We’ve been aggressively promoting in Japan and Korea. There’s no reason why JAL would cut back on flights,” he said.

He said, though, that it is ultimately JAL’s corporate decision.

Three years ago, JAL Group went into an integration agreement with Japan Air Systems, resulting in restructuring of business operations.

Following that, Japan Airlines Co. Ltd. became Japan Airlines International Company, Ltd.

The change of name took effect in April 2004.

The new company “Japan Airlines International Company, Ltd.” has been responsible for international air transport business while “Japan Air System (JAS)” became “Japan Airlines Domestic Company, Ltd.” (Kabushikikaisha Nippon Koku Japan), tasked to handle domestic air transport operations.