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Press Release


 Jun 25 1999
 No.

JAL's LOW COST CHARTER SUBSIDIARY REBORN


AS SCHEDULED AIRLINE - JALways

Japan Air Charter, a low-cost subsidiary airline 80 percent-owned by Japan Airlines (JAL), is to be transformed into a scheduled carrier and renamed "JALways".

The "new" airline will gradually take over JAL routes to Pacific resort destinations. The first operation by JALways under its new name will be from October on the Tokyo-Kona-Honolulu-Tokyo route.

From April 2000 JALways will start taking over short-range international flights from JAL.

The planned changes to JAZ were first announced by JAL in mid-March when the airline announced its latest corporate plan for the period 1999-2001. The conversion will enhance the JAL Group's competitive power in the international airline market.

A formal decision for the change was taken at the Japan Air Charter annual general meeting of shareholders in Tokyo on June 25.

BACKGROUND TO JAZ

Established in 1990, JAZ started commercial charter flights in 1991. Japan Air Charter was first conceived as a low-cost charter airline to operate tourist flights to Asia-Pacific resort destinations from regional airports in Japan.

It was created in response to a Ministry of Transport policy to expand international airline operations out of regional airports in Japan. Lack of capacity at Narita and Osaka Airports restricted international flight expansion for both Japanese and foreign airlines.

JAL thought that the best way to follow the Ministry's policy was by providing charter flights, and because charter operations were low-yield business, the concept of a low-cost subsidiary - JAZ - was born.

The short term strategy for JAZ was to build up experience of low-cost operations for overseas inclusive tour charters (ITC) from regional airports in Japan to popular over-seas destinations. At that time, there were no airport slots for ITC charter flights at Narita Airport or Osaka's Itami Airport.

OFF-SHORE BASED CREWS - LOWER COSTS

The new carrier obtained its aircraft from JAL. Cockpit crews were hired overseas on a contract basis and are now based in Hawaii. Cabin attendants are hired and based in Bangkok, where JAZ operates a cabin crew training centre. Some cockpit crew and a number of senior cabin attendants have been transferred to JAZ from JAL.

A NEW ROLE FOR JAZ

However, while JAZ was being created, the effects of Japan's recession and increasing foreign competition were hitting the parent's business hard. Added to JAL's burden was the strengthening yen, driving up costs. JAL's corporate planners saw a new role for JAZ to help reduce those costs.

WET LEASES FOR JAL

The new, longer term strategy, was to develop JAZ into a sched-uled carrier, operating on a wet-lease basis for JAL on high-density, low yield tourist routes in the Asia-Pacific region, with particular emphasis on Japan-Hawaii service. (Wet-lease operations are the hire of an aircraft complete with crew, to perform services for another airline or con-tractor)

From February 1992, Japan Air Charter airline has been used by JAL on this basis to fly to resort destinations, mainly Hawaii, on JAL's behalf. The flights are regular, scheduled JAL flights, with JAL flight numbers, but the aircraft, cockpit and cabin crews are provided by JAZ.

JAZ started wet-lease flights for JAL in 1992, operating a weekly flight between Sapporo and Honolulu and two weekly Fukuoka-Honolulu flights. From April 1994 and over the next four years, JAZ wet-lease operations for JAL were expanded significantly.

As of July 1, JAZ will be operating up to 49 weekly round-trip flights for JAL on a wet-lease basis. The number changes according to season. Of those 49 flights, 35 are round-trip services between cities in Japan and Hawaii, and there are seven (daily) round trip flights each between Tokyo and Bangkok and Osaka and Bangkok. In addition to the wet-lease flights for JAL, JAZ flew 84 charter flights (one way basis) in the year April 1 1998-March 31 1999.

Passenger traffic

JAZ carried a total of 1,155,452 passengers in FY1998, of which 1,139,460 were on wet-lease flights for JAL and 15,992 passengers -were on charter flights operated by JAZ for regional travel companies in Japan.

JAZ Fleet: DC-10-40: 4, B747: 5

Personnel: 986: (Cockpit crew: 151,Cabin attendants: 779, Ground staff: 56 -includes management).

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