JAPAN: Transport minister raises questions about whether Japan needs two mega air carriers

January 20, 2010

Land, Infrastructure, Transport and Tourism Minister Seiji Maehara has raised questions about whether Japan needs two mega air carriers when he met with the press regarding the legal liquidation of Japan Airlines (JAL).

"In addition to slashing its workforce by 15,000, we'll require JAL to withdraw from unprofitable routes. Considering Japan's competitiveness in the world, we must consider our civil aviation policy, including whether Japan needs two mega carriers (JAL and All Nippon Airways)," he told a news conference Tuesday.

"It's the best scenario for the two airlines to continue to develop, but we must avoid causing both firms to go under. As long as taxpayers' money is used (to bail out JAL), we can't make any mistakes," he told reporters after the news conference.

However, Maehara said it is necessary for now to bail out the ailing carrier. "JAL is a company that forms a key part of the aviation network, which is the basis for Japan's development, so the government will help the airline to rehabilitate itself," he said.

The minister said JAL is required to start over from scratch, while pointing out the government's responsibility for JAL's failure.

"The company tended to rely on its belief that the government will bail it out in the end. The president of Japan Airlines (Haruka Nishimatsu) has resigned and the company will be required to withdraw 100 percent of its shares from the market to hold shareholders responsible for its failure," he said. "The government, which continued to build unnecessary airports and forced airlines to fly to such airports, is also to blame."

He also justified the legal liquidation of JAL. "The JAL group is saddled with over 2 trillion yen in debts, and should be disbanded under normal circumstances. Private restructuring would require less money but it is doubtful whether it could fundamentally solve the problems, including the major issue of corporate pension benefits. The government isn't allowed to postpone a fundamental solution."

When asked whether individual shareholders should be held responsible for JAL's failure, the transport minister said, "A bailout plan that wouldn't hold shareholders responsible, would be hardly acceptable to the public."

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View Article in The Mainichi Daily News