Maintenance Strategy Japan Airlines Versus All Nippon Airways

Maintenance Strategy Japan Airlines versus All Nippon Airways

Hiroki Sayama

Graduate Student

Report Distributed February 6, 2008

Abstract

The Japan Airlines Co. Ltd. (JAL), the Japan's national flag carrier and one of the airline giants in the world, is continuously suffering a financial loss. Following a series of safety problems and reported management infighting tarnished the firm's image and JAL is losing public trust. JAL has yet recovered flagship pride since the flight 123 catastrophic accident* experienced in 1985.

On the other hand, the All Nippon Airways, Co., Ltd. (ANA), second place rival competitor keeps their operation in top shape even if the industry is shaken by sky high soaring fuel price. Supported by strong financial backbone, ANA ordered more than 120 airplanes to Boeing in last three years to replace existing and aging airplanes. In 2004, ANA proudly announced an introduction of Boeing 787 airplane into their core fleet structure and became the first oversea launch customer to Boeing.

Although business plan and strategy varies and diverse in various fields, this report focuses on JAL and ANA's maintenance strategy and compares carrier's organization structure, outsourcing policy and fleet planning to evaluate how these companies maintain airplane safety and airworthy .

TABLE OF CONTENTS

ABSTRUCT ii

I. INTRODUCTION 1

A. Market Share in Japan 1

B. Brief History - JAL and ANA 2

II. ORGANIZATION STRUCTURE 3

A. JAL Engineering and Maintenance Company 3

B. JAL and JAS Merger 3

C. ANA Strategy 4

III. MAINTENANCE STRATEGY 5

A. JAL Maintenance Outsourcing 5

B. ANA Maintenance Key Factors 6

IV. FLEET PLANNING 7

A. JAL Fleet Consolidation Plan 8

B. ANA Cost Reduction and Fleet Streamline Plan 8

V. SAFETY AND EDUCATION 10

A. JAL-ANA Joint Training and Staffing Strategy 10

B. Establishment of Safety Promotion Center 10

VI. OPINION 12

IV. REFERENCE 19

I. INTRODUCTION

A. Market Share in Japan

Japanese domestic airlines carried 96.97 million passengers in fiscal 2006, 2.6% more than a year earlier (See Figure 1). All Nippon Airways Co. (ANA) grabbed the top spot for the second straight year although its domestic market share slipped 0.5 percentage point to 47.6%. Following a series of safety problems and reported management infighting among Japan Airlines Corp. (JAL) tarnished the firm's image and losing public trust, it seems a fair number of JAL customers switched to ANA.

ANA continued to do well with business travelers and expanded its base of individual customers enhanced by ongoing economic recovery and introduced new sales campaign aimed at attracting these customers. JAL saw its share drop by 1.7 points to 44.7%, compared with the 1.5-point fall it had suffered a year earlier. It lost customers to ANA and new airlines like Skymark Airlines Co. and other start-up airlines as well. (Ref 1)

|Airlines |

|Rank |Company |Share |Point Change |

|1 | All Nippon Airways |47.6 |-0.5 |

|2 | Japan Airlines |44.7 |-1.7 |

|3 | Skymark Airlines |3.0 |0.6 |

|4 | Hokkaido International Airlines |2.0 |0.5 |

|5 | Skynet Asia Airways |1.3 |0.3 |

|Total number of domestic airline passengers: 96.97 million (up 2.6%) |

Source: Japan Civil Aviation Bureau (JCAB)

Figure 1 - Domestic Airline Share Survey

B. Brief History of JAL and ANA

JAL was established