I think many would agree that when a company with the stature and history of Japan Airlines (JAL) announces it is exiting the maindeck cargo market, the day seems a bit darker, the world a bit harsher. The announcement ends a venerable run in the business that lasted over five decades from its very first DC-4 freighter service from Tokyo Haneda to San Francisco in 1959.
While JAL Cargo will technically still exist, it’s presence will be significantly diminished without its dedicated freighters and worse still, it will become beholden to the routes and schedules of its passenger side.
The airline is quick to point out however that the belly capacity of its passenger fleet represents three times as much total cargo capacity as its freighter services. But the trouble with that, is that a lot of passenger belly capacity does not necessarily translate into a lot of useable cargo capacity. It simply can’t be leveraged in the same way and it may not be as attractive a product to some of its key customers in that form.
There are really no current comparisons in the industry – it’s tempting to point to the recent example of the Air France-KLM group which transferred freighters to its Martinair subsidiary saying it had enough belly capacity to meet demand. But the key difference is that it still has dedicated freighters at its disposal, whereas JAL Cargo will not.
In the meantime it will be interesting to see how things develop, how the capacity withdrawal by October this year will impact the air cargo market in Japan and elsewhere. Certainly there are worries that with JAL’s 10 freighters – effectively representing some 1,000 tonnes of capacity – pulled from the market there will be a capacity crunch, at least in the short-term. Rates will undoubtedly climb, which is probably not such a bad thing in the current environment.
Some observers point out that this could present an opportunity for the integrators, or for other new maindeck or combination carriers to gain a foothold in Japan, although this relies on the very challenging ability to get traffic rights and landing slots. It will probably benefit JAL’s native competitors, All Nippon Airways (ANA) and Nippon Cargo Airlines (NCA) the most.
The decision to pull the plug on the freighters was surely not an easy one. The savage beating that the global economic recession meted out on the air cargo industry in general and the maindeck sector in particular, was nothing less than severe. The passenger side was of course broad-sided as well, and the conspiracy of all these factors was simply far too great for an already ailing JAL to withstand.
The pain at JAL is clearly not over, as the restructuring exercise has yet to run its course and the latest bad news is that up to a third of JAL’s global workforce, or 16,500 people may lose their jobs. Among them are 5,405 workers from cargo and other peripheral operations, 2,460 flight attendants, 2,043 sales representatives and 775 pilots. The road is clearly still long, but for the sake of the carrier, its employeesand the industry in general, hopefully the ride becomes smoother with time.