SPOTLIGHT: Airlines flounder, Japan gov’t support still far from immediate relief | Reuters

TOKYO (Reuters) – Governments are stepping up efforts to bail out airlines as the coronavirus pandemic hits passenger demand. In Japan, where the two major companies are facing financial deterioration, the government has proposed measures to reduce the burden by reducing airport usage fees, and there are voices within the ruling party calling for additional measures.

Even so, the movement of people within Japan is gradually recovering and financial institutions are being supported financially, so there is no sentiment yet for a government hand in capital like in Europe.LufthansaRagdIt seems that the German government, which has decided to directly bail out, is still some distance away from responding to the same level as Europe.

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“It will be an unprecedented reduction,” a senior official of the Ministry of Land, Infrastructure, Transport and Tourism, which has enacted measures to reduce airport usage fees paid by airlines, explained to ruling party officials in early October.

According to the Ministry of Land, Infrastructure, Transport and Tourism, the annual airport usage fee for fiscal 2020 is expected to be around 250 billion yen. Among them, 88 billion yen is expected to be collected for landing fees and security fees, and 160 billion yen for the use of navigation aids is expected to be collected to pay air traffic control services. This time, we will take measures to reduce the collection rate by 45%, focusing on landing fees and parking fees, and set a maximum of 12.5 billion yen as a support measure.

Since the beginning of this year, due to the impact of the new coronavirus epidemic, the number of passengers in the aviation industry has plummeted. From April to June, ANA Holdings and JAL ended up with losses of 108.8 billion yen and 93.7 billion yen, respectively. .

ANA, the largest of these airlines, is considering modifying its routes with its subsidiary ANA, according to multiple sources. It is possible to consolidate domestic routes centering on the take-off and landing routes of Haneda and Itami, and reduce the take-off and landing routes of local routes. International flights will also prioritize departures and arrivals from Haneda, with Kansai, Chubu and Narita temporarily suspending most flights.

Among the ruling party cadres of the Liberal Democratic Party and the Komeito Party, voices have been heard to protect aviation infrastructure at all costs. There appears to be an increasing call to consider remaining cost burden cuts and tax benefits. We need additional support,” he said.

The Japan Regular Airlines Association, an industry group, pleaded for support at a meeting with the government this spring. In addition to lowering airport usage fees, they are also seeking measures to reduce public burdens, such as exemption from navigator usage fees, deferment of aircraft property tax and fuel tax, etc.

“There is a limit to what we can say ‘overcome it through management efforts’,” said another midlevel LDP lawmaker.

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Europe has led the way in taking more direct action on government aid to airlines, with Lufthansa also struggling with a 9 billion euro ($10 billion) government bailout. Italian airline Alitalia was fully nationalized in June.Air France KLMAIRF.PABoth Air France and KLM receive financial support from the French and Dutch governments.

No such voice has yet been heard within the Japanese government or ruling party. Unlike European airlines, which have many cross-border flights, Japan’s main focus is on domestic flights. The movement of people has resumed due to the government’s “go travel” and other tourism support measures, and domestic flights of ANA and JAL have shown signs of recovery. GoTo Travel was originally scheduled to end at the end of January next year, but due to economic measures introduced before the end of the year, it may be extended.

In addition, financial institutions remain sound and have the strength to support airlines. ANA is expected to announce on the 27th of this month that it will purchase 400 billion yen of subprime loans from five banks, including Sumitomo Mitsui Banking Corporation, and reform its business structure.

“Shares are back on track and fortunately we have not been forced to deal with impairment losses on shares held by financial institutions,” the former cabinet minister said. He pointed out that as long as the financial institutions are strong, the government may not be necessary to inject capital directly into the airlines.

However, we do not know how long the corona crisis will last. The Japanese government is gradually easing travel restrictions to other countries, mainly in Asia, but there is no sign that the infectious disease outbreak in Europe or the United States will subside, nor the prospect of a full recovery of international flights.

“Currently, businesses are bearing the brunt, but if the impact of the coronavirus persists into next spring, the severity will increase,” said a ruling party midlevel lawmaker. For now, though, “direct injections are a ‘last resort,’” A ruling party lawmaker with an industry background said.

Another ruling party said, “While ‘self-help and mutual aid’ is waiting for demand to recover, the other ruling party may have the option of formulating a medium-term strategy, such as how to capture demand in Asia, which “has less impact than Europe and the United States, new business. “The official said.