Pandemic-hit airlines expand horizons in search of profit

The Yomiuri Shimbun

12:20 JST, January 2, 2022

With their flight operations suffering losses amid the pandemic, airlines are finding creative ways to branch into new businesses or wring the last drops of value out of retiring aircraft.

With the omicron variant of the novel coronavirus compounding their worries, airlines are at a crucial juncture.

This month, Japan Airlines was set to launch a business to assist Japanese companies in marketing their goods online to consumers in China. Using an exclusive page of the WeChat communication app from leading Chinese IT firm Tencent, JAL will help Japanese companies promote, sell and deliver their products. The airline will also support the tasks of collecting and delivering local specialties from around Japan.

ANA Holdings Inc. last autumn began selling interior equipment from its aircraft through an online auction run by Yahoo Japan Corp. Items put up for sale included seats of the type used in first class on international flights, which normally would have been discarded when no longer needed, and window frames of large aircraft.

Both JAL and ANA have also begun to sell their in-flight meals on the ground. Previously, they had sold such instant foods as cup noodles, but now both have upgraded their offerings to include frozen in-flight meals, which have become hit products.

The airline industry remains in an enervated state, with passenger numbers on international flights yet to recover from a 90% plunge from pre-pandemic levels. Even domestic flights tend to be less than half full, although the New Year holiday period has been an exception.

Both airlines are expected to log a net loss on their consolidated statements for the fiscal year ending on March 31, marking a second consecutive annual loss. The awaited upturn in their performance has been slower than expected.

Both have been striving to streamline their operations at a fast pace. Both have reduced their personnel expenses by loaning their employees to other companies and cutting bonuses while reviewing the number of flights they operate. “We’ve been trying out all possibilities,” a senior official of ANA Holdings said.

They have also been exploring new ways to make use of their aircraft. For a limited period, ANA offered a Boeing 777 that was set to be retired from service for use as a wedding hall. A couple could hold a reception on board, with a cabin attendant giving her blessing to the newlyweds as an in-flight announcement. The company has been pushing ahead with retiring its larger, less fuel-efficient aircraft as part of its structural reforms, but this service was proposed by an employee so that such aircraft can make one last contribution to the company’s earnings, no matter how small.

JAL has operated a 3½-hour flight out-and-back excursion, departing from and landing at Narita Airport, on which passengers could enjoy a live performance by a professional violinist. The number of music-lovers who applied for tickets was about double the number of available seats. ANA, too, has operated excursion flights, during which passengers enjoyed in-flight meals and music while immersed in the atmosphere of Hawaii.

Airline companies have long relied almost solely on their flight services, but now they have been driven into altering their business model. Yasuo Hashimoto, a visiting professor at J.F. Oberlin University in Tokyo, noted, “When airlines reinforce their non-aviation businesses, one result will be the growth of new aviation demand.”