JAL / JAS Completes Integration

The first day of April 2004 marks the completion of the integration of Japan Airlines and Japan Air System. The plan for the two airlines to integrate was launched in November 2001. After the Japanese Fair Trade Commission approved the integration in late April 2002, it was decided to proceed in two phases.Ê Phase One was launched in October 2002 with the formation of a holding company, called Japan Airlines System Corporation, to supervise the integration. During this initial stage, the airlines consolidated their domestic networks.

Phase Two will be realized on April 1st, 2004, when two new companies will come into being:Ê

JAL International for international flight operations (passenger and cargo freighter flights) and JAL Domestic for domestic operations.

Instead however of referring to the two companies separately JAL, or Japan Airlines will be used.

The holding company remains in place but from late June will be renamed Japan Airlines Corporation, to emphasize the JAL brand.

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Most of the Phase One measures of integration have taken place in Japan. These included the following:

1. Unification of internal communications
2. Sales forces unifiedÊ
3. City sales offices consolidated (106 sales offices in Japan reduced to 60 nationwide).
4. Airport, reservations and ticketing staff unified
5. Airport counters unified - Airport signage corrected to JAL branding
6. From April 1st, 2004 JAL CRS takes over total reservations functions
7. FFP unified under JAL Brand
8. JAS Brand image eliminated from April 1st
9. Adoption under JAL branding of attractive and popular JAS products

Possibly the biggest single integration action has been the IT integration. JAL’s IT systems are IBM based. JAS used Unisys. From April 1 the JAL IBM system becomes the standard. A team of 600 people from JAL, JAS and IBM worked on the IT integration.

‘‘We have completed the initial main task. We have integrated networks, sales, back-office functions, airport operations and IT, reported JAL Group CEO Isao Kaneko. ‘‘In the long term, we will consolidate fleet composition and restructure flight operations, but these are long term targets and we are not committed to any detailed plans.’’

‘‘In order, we will work on integrating maintenance, cabin services and then cockpit crew organization. We have intentionally left separate cabin crew and cockpit crew integration. These require adjusting work conditions and pay scales,’’ he added.

The new airlines will continue to operate based on the cockpit crew groups of the former JAL and JAS. There are some small differences in cockpit crew working conditions and these will remain until eventual complete integration for which there is currently no fixed deadline.

April 1st Phase Two Events

JAS will disappear as a brand on April 1st. All JAS signage is being replaced by the new JAL symbol, introduced in September 2002.

Other related items covering the next few days.

1. March 31st - late evening - removal of the last JAS sign behind the check in counter at Tokyo’s Haneda Airport and replacement with the new JAL logo March 31 - about 9.30 p.m.

2. March 31st - at Narita, the, departure of the last JAS flight to Shanghai

3. April 1st. departure of JAL Domestic flights at Haneda with send off ceremonies as follows:

JL1905 Tokyo-Okinawa , (07:45)Ê
JL1509 Tokyo-Itami (Osaka) (09:00)
JL1713 Tokyo-*censored*uoka (10:00)

These are not the first flights of the day but are representative of major domestic routes. From April 1st, all JAL Domestic flights have been newly renumbered, with 4-figure flight numbers instead of 3-figure numbers.

Integration Savings

The cost of integration in FY2004 and FY2005 is expected to be substantial (36 billion yen over the next two years) but the group believes that the total integration effect will be a total annual saving of 63 billion yen from FY2005.
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