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Monday, August 24, 2009

Rumor: JAL will implement 10% reduction in work force in the next 3 years

It has been reported that Japan Airlines is considering a 10% work force reduction (~5000 employees) in the next three years as part of its restructuring plan. This will save JAL a total of 150 billion yen.

To achieve this, JAL plans on doing the following:
  • Attrition
  • Encourage early retirement
  • Encourage the use of leave of absence system
  • Sell off minor subsidiaries within JAL group 
  • Realign subsidiaries 

Of course, other means of cost reductions JAL is considering include more route suspension and reduction, and selling off their extra 744 as they are in progress of switching to smaller aircraft. They have more 744 than they need, especially after switching 9 routes from 744 to smaller aircraft on October 25 2009. But I doubt JAL can get a good deal out of those 744s under this economy and almost everyone is having problem filling up their planes.

All these will be finalized and announced by the end of September as part of the restructuring plan. So far all of the rumored measures are focused on trimming costs. I still haven't seen measures to increase their revenue. The domestic J and F class they rolled out couple of years ago are good ways to the increase revenue. For 1000 yen and 8000 yen, you can upgrade your Y class ticket to J and F class respectively on domestic flights. If you offer me similar deals on international flights, e.g. from economy to premium economy (just like UA's Economy Plus), I wouldn't mind paying extra fee.

Source: Japan Today

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