Guided by a Group management strategy that emphasizes deep-rooted customer orientation, the optimization of business processes, and human-resource measures, our goal is to maximize corporate value.

Low-cost carriers are eating away at network carriers in Europe and North America. This is due to the availability of inexpensive suburban airports and the existence of a labor market for pilots. In Japan, by contrast, all slots are taken at Haneda, the only airport in the Tokyo area used by domestic flights. What is more, there is virtually no labor market for pilots in Japan. Low-cost carriers have emerged in Southeast Asia, but are confined to regional operations in countries such as Thailand, Malaysia, and Singapore. I think it will be some time yet before the dawning of an era in which European, U.S., and other low-cost carriers are competing in the Japanese market. I would add that within the JAL Group we already have two models for low-cost carriers: JALways on international routes and JAL Express on domestic routes. The cost per flight of those two carriers is around 10% lower than our network carrier flights, and by making skillful use of low-cost operations, we expect to make still further reductions in costs.

Safety is the very foundation of everything we do, and is also a social responsibility. Staff throughout the Group, not only the personnel directly involved in flight operations and maintenance, but also those indirectly linked, must look at every single flight with the same attitude. For example, the JAL Group Safety Charter is printed on cards and distributed to each and every employee so as to firmly imprint safety-consciousness into them. In ways such as this, we strengthen the Group-wide safety management structure and ensure a uniform safety level. As for safety measures, I consider it to be of the utmost importance to maintain a posture of disclosing and sharing information constantly on our website.

Q

In our current medium-term business plan, safety and CSR are pivotal. If you break down CSR you can see that the biggest issue is the approach to the environment. The airline industry imposes a considerable burden on the environment, consuming fossil fuels and producing carbon dioxide and noise. It is incumbent on us to consider how to reduce that burden efficiently. Another important component is investor-relations activity. It is crucial for us to engage in sound and transparent corporate activity, and to disclose it to all our stakeholders. The same applies to activities for the sake of society.
If you look at things such as CSR ratings, you will immediately find an array of social responsibilities that are not confined to the environmental sphere but also include issues such as fair employment practices. In April 2004 the JAL Group established the CSR Committee, which I chair. The committee does not limit its attention to the existing framework of CSR issues. Rather, we engage in a broad debate about what we should do, and to what extent we should do it.

Q

For a company to compete, it must ensure it is complete on both the hardware and software sides, that is, its equipment and facilities and its services. On the hardware side we can compete to the extent that we spend money on hardware, but in the final analysis, the deciding factor lies on the other side, namely personnel. Personnel constitute a particularly important resource for us in the airline industry. During periods of cost-cutting through structural reforms, personnel development tends to be inadequate, but we have learnt from that, and in October 2003 I inaugurated a career-development program for middle-ranking employees in their thirties and forties. I attend all the sessions and take questions, as I think that for human-resource development it is important for senior management to engage in direct dialogue with employees in this way.

Airlines worldwide are plunging into international mergers and amalgamations beyond the confines of alliances. Therefore, it is important to build the ability to deal with international reorganization.

Q

The airline industry has been damaged by a variety of factors, but it is basically an industry that will continue to grow. As regards international passenger and cargo movements, growth of around 5% is expected in overseas markets. Moreover, larger growth is likely in the Southeast Asian region. But we cannot expect to see strong growth within Japan, where I think we may see a gradual increase in demand of 1% to 2% per annum. I believe we will definitely triumph in this market if we improve the fabric of the Group by strengthening cost competitiveness and pursuing structural reform. In addition, the integration has opened up the way towards our being the world’s leading airline, and that is the position we will be aiming for. The airline industry is heavily regulated internationally, but I expect to see it being opened up more and liberalized. It may take 10 or even 20 years, but when the industry is fully deregulated internationally we must ensure we have the corporate makeup and essence to triumph over any competitor.