Japan's two operators of international B747 freighter services are looking to build on their recent codeshare agreement across the Pacific.
Japan Airlines and Nippon Cargo Airlines (NCA) have filed for approval to share space on their flights between Japan and Los Angeles and Chicago on the other side of the ocean, beginning in late March. Now the pair are considering a similar arrangement on routes from Japan to Seoul and Shanghai, according to Yuji Fujita, vice-president of planning and marketing for cargo and mail at JAL.
He added that this could open the door to partnership on further sectors. "We are open to discussing collaboration. Maybe we will discuss the whole network," he said.
The partnership could extend to other aspects, such as ground handling, Fujita revealed. JAL Cargo is examining the viability of two kinds of alliances, he said - horizontal alignments with other airlines and vertical alliances with partners from different fields of the business. In terms of airline partnerships, JAL already is working with Lufthansa, Singapore Airlines, British Airways and China Cargo.
The codeshare deal with NCA addresses a fundamental challenge for both carriers. Demand has shrunk too much to allow them to fill their own freighters at daily frequencies on the Chicago and Los Angeles routes, so they either cut frequency or combine the two US points, which is far from ideal from an operational standpoint. By putting their codes on each other's flights, they can maintain the frequency requested by the market without having to fly half-empty planes.
JAL has cut its all-cargo fleet aggressively over the past year as it shifted its strategic focus from growth to yield and profit maximisation. Its 747-200 freighters have been retired ahead of plan, and an order for a converted 747-400F has been scrapped. In addition, management put the brakes on the 767 freighter fleet expansion. Two outstanding orders have been converted to passenger planes, leaving the mid-sized freighter fleet at three units.
The deployment of B777s in passenger service has mitigated some of the capacity reduction on the freighter side, producing a relatively flat overall capacity level.
The 767-300 freighters, which ply intra-Asian routes, are earmarked for a migration to Haneda as Tokyo's domestic airport opens to international flights. Its runway cannot take a fully loaded 747 freighter, but a 767-300F is fine there, Fujita remarked.
JAL Cargo management intends to maintain the current freighter fleet size for the next two to three years, but if the sluggish market situation continues, it may have to reconsider the number of freighters in action, Fujita said.
The Japanese market does not bode well for this. According to figures from the country's air freight forwarders association, de-mand out of Japan was down 21 percent last October, 39 percent in November and as much as 50 percent in December. Overall, Japan's exports slumped 27 percent in November and 35 percent in December, with exports to the US down 36.9 percent. And production is likely to contract further. Orders for machine tools were down 72 percent in December, signalling that Japanese manufacturers are hunkering down.
For JAL Cargo this augurs more pain. According to Fujita, the carrier had been well on course toward its profitability targets between April and September, but the slump in the final quarter undermined these gains. A 26.8 percent drop in international cargo revenues in the October-December period produced a seven percent decline for the April-December time-frame.
Curbing the freighter fleet through the retirement of the 747-200Fs has been the main plank of JAL Cargo's efforts to trim costs and improve efficiency. Further gains have been accomplished through a variety of other initiatives, such as the consolidation of warehousing at Narita airport, where the carrier previously operated five cargo facilities.
Automating processes with forwarders is another area where JAL is looking to improve efficiency. Management is eager to push the use of Ezycargo for on-line bookings, and it is looking to the e-freight initiative.
"We are no in touch with IATA (International Air Transport Association) and with the Japanese authorities to start e-freight. We'd like to start some tests and pilot cases this year," said JAL's Fujita.
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