Japanese Airline Industry Under Threat From COVID-19

Credit: All Nippon Airways

The expanding COVID-19 outbreak is threatening to derail what was expected to be a milestone year for the Japanese airline industry.

While many countries in the Asia-Pacific region are taking an economic hit from the outbreak, it is a particularly cruel blow for Japan’s aviation sector. The Japanese government and airlines have long been targeting 2020 for a surge in network growth and tourist traffic, but this is now at risk as carriers slash flights in response to travel restrictions and plummeting demand.

Flight cuts already announced by Japanese and overseas airlines will put pressure on the visitor targets. Another headache would be the cancellation of the Tokyo Olympics, which is scheduled to begin on July 24, if the COVID-19 outbreak is not under control by midyear.

Japan’s major airlines have kept capacity growth relatively low over the past few years, and they have been aiming to ramp up international service during their 2020 fiscal year, which begins April 1. 

But COVID-19 has completely changed the picture within the space of a few months. Travel across Asia has dried up, and Japan’s key markets, China and South Korea, have been the worst affected by COVID-19. All Nippon Airways (ANA) and Japan Airlines (JAL) have cut large numbers of flights, and overseas airlines have suspended many services to Japan. Some countries have imposed travel restrictions or quarantine requirements on anyone who has been in Japan recently.

The effect of flight reductions in the Japanese market has been severe. The international seat total for all carriers on Japan routes dropped by 34% during the five weeks through March 8, according to data from CAPA - Centre for Aviation and OAG. Domestic services were relatively unscathed until the first week of March, but this changed with the announcements of domestic flight cuts by ANA and JAL.

 

However, while a few Asia-Pacific airlines have deferred aircraft deliveries in response to the COVID-19-related demand slump, so far there have been no signs of the Japanese carriers doing so. In fact, ANA had just placed a significant aircraft order on Feb. 26.

This is an abbreviated version of an article by Adrian Schofield that appeared in Aviation Week & Space Technology. Subscribers can read more about the impact COVID-19 has on the Japanese market and ANA’s latest aircraft order in the full article.