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Japanese airlines could see 1 tril. yen revenue fall on virus pandemic

  • March 28, 2020
  • , Kyodo News , 11:18 a.m.
  • English Press

TOKYO — The global coronavirus pandemic could result in a 1 trillion yen ($9.3 billion) fall in combined revenue for the Japanese airline industry in the next 12 months, according to an estimate by a domestic aviation organization.


The Scheduled Airlines Association of Japan forecasts domestic carriers such as Japan Airlines and All Nippon Airways will lose over 400 billion yen in revenue in just four months through May, much worse than the about 300 billion yen in annual revenue decline during the time of the 2008 global financial crisis.


The number of airline passengers has been sharply decreasing around the world, with a tally by Johns Hopkins University researchers showing that around 600,000 people have been infected with the pneumonia-causing virus.


“We often see flights with passengers in the single digits,” an official of the aviation body said, in what some call an “unprecedented crisis” for the industry.


The association has requested that the government exempt airlines from paying airport charges and aircraft fuel tax.


The lack of demand for domestic flights has hit aviation firms far greater than the 2003 severe acute respiratory syndrome, or SARS, epidemic, which did not directly affect Japan.


Two Japanese flag carriers, JAL and ANA, have decided to reduce domestic flights in the summer by about 20 percent after many events in the country were canceled or postponed.


“We have never seen such a sharp fall in demand for domestic flights, a source of stable income for Japanese airlines,” said an official in the aviation industry.


Travel restrictions issued by authorities in many countries have forced major Japanese aviation firms to drastically reduce international flights.


ANA proposed to a labor union that 5,000 full-time flight attendants take partially paid leave for a few days starting April due to flight cancellations so it could continue to employ them, the company said.


Some airlines moved to secure enough cash amid the rapidly changing business environment.


ANA plans to receive a loan of 100 billion yen from financial institutions, while JAL decided to issue corporate bonds worth a total of 20 billion yen. Star Flyer Inc., under the wing of ANA, will borrow 4.1 billion yen from banks.

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