Shareholder Benefit Program

As part of our sales and marketing strategy, we plan to offer our shareholders certain other benefits. Specifically, for our shareholders who own 100 or more shares of our common stock, we will grant 50% discount coupons on regular one-way airfare for any flight on designated domestic routes serviced by Japan Airlines Co., Ltd., Japan Transocean Air Co., Ltd., Japan Air Commuter Co., Ltd. and Ryukyu Air Commuter Co., Ltd.

We believe that this program will serve as an important marketing tool that will help us compete in the domestic market, where our main competitor also has a discount coupon program in place. At the same time, we believe we have designed a well-balanced program that optimizes revenue through increasing demand on flights with excess capacity, while implementing certain restrictions that limit the use of discount coupons during peak travel periods. Specifically, our new shareholder benefit program differs from our old program that was in place prior to our reorganization in the following ways.
First, while our old program generally imposed no restrictions on the availability of seating, under our new program we will control the number of seats available to passengers using discount coupons based on our revenue management analysis.
Second, while our old program allowed passengers using discount coupons to reserve and hold seats without purchasing the tickets, under our new program reservations by passengers using discount coupons will be cancelled if the ticket is not purchased within three days of the reservation. Due to the above restrictions on the available seats for passengers using discount coupons, our program will encourage passengers to use discount coupons on flights with excess capacity, which will help us achieve higher revenues and load factor on such flights.

In addition, we believe that offering our shareholders discount coupons will encourage them to fly with us more often, especially since we have not issued such discount coupons since before our corporate reorganization proceedings.

The number of discount coupons to which shareholders will be entitled under our shareholder benefit program is based on the number of shares owned as set forth in more detail in the table below.

The number of discount coupons to be distributed to each shareholder on each of the two annual distribution dates will be, as a rule, one half of the discount coupons such shareholder is entitled to receive for the entire year. If the number of discount coupons cannot be divided evenly between the two annual distributions, the number of coupons for the distribution for record shareholders as of March 31 will be rounded up, and the number of coupons for the distribution for record shareholders as of September 30 will be rounded down.

For those shareholders who own shares with the same shareholder number for seven consecutive record dates, we will grant extra coupons as below as a way of expressing gratitude to such shareholders for investing in us for a long period of time.