Japan Airlines To Shift Thousands Of Employees To Subsidiary Businesses

Japan Airlines is eyeing transferring around 3,000 employees to subsidiary airlines and non-aviation business areas. The airline had over 35,000 employees on its books at the end of March, with the reshuffle impacting less than 10% of the airline’s overall workforce. Japan Airlines says the move reflects a shift in focus at the airline and is a matter of putting its people where the growth and highest revenue earning opportunities are.

A shift in focus at Japan Airlines

Japanese news outlet Nikkei Asia broke the story this week. The outlet says because Japan Airlines is focusing on tourist demand in the short to medium term future, rather than the traditional more premium corporate market, the 3,000 workers will move from the “core” Japan Airlines aviation business to non-aviation business units like airport shopping, e-commerce, and insurance and also to low-cost-subsidiary airlines such as Zipair Tokyo.


Japan Airlines wholly owns or has stakes in multiple subsidiary airlines, including Zipair Tokyo, J-Air, Japan Air Commuter, Japan Transocean Air, Jetstar Japan, Hokkaido Air System, and Ryukyu Air Commuter. Nikkei Asia suggests that 60% of the diverted workforce will go to non-aviation business units while the remaining 40% will go to various subsidiary airlines.

Around 40% of the transferring workers will head to low-cost subsidiary airlines like Zipair Japan (pictured). Photo: Zipair Japan

An eye on snaring a larger slice of the leisure and tourist market

The move won’t happen overnight. Instead, Japan Airlines says it will take up to three years to complete the employee transfer. The reasoning behind the decision is a mix of changes impacting many airlines and some distinctive forces to the Japanese market. Like many other airlines, the Japan Airlines Group has successfully diversified into non-aviation-related business activities, springboarding off their large frequent flyer program into financial businesses like insurance and retail activities such as online shopping malls.

As many other airlines have found, the benefit of these types of businesses is that they don’t depend on the amount of flying happening. As such, they’ve proved good revenue hedges against events like pandemics.

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There’s also a belief at Japan Airlines, as at other airlines, that the domestic and international Japanese tourist and leisure markets will recover far quicker than the corporate market. Tourist and leisure passengers are usually more price sensitive than corporate passengers and are more likely to fly on a low-cost carrier than a traditional full-service airline. That’s where the Japan Airlines Group sees its short to medium-term passenger growth, so that’s where they are allocating resources.

Non-aviation-related businesses, such as online shopping, have proved financially successful and relatively pandemic resistant for the Japan Airlines Group. Image: Japan Airlines

Japan Airlines retains workforce agility

Before the pandemic, the full-service Japan Airlines brand earned around 70% of the Japan Airlines Group’s overall annual revenues. But the company forecasts this dropping to around 55% by the time the employee transfer is complete.

Reassigning employees, rather than losing them through voluntary or involuntary retrenchments / resignations, has been the practice of Japanese carriers throughout the pandemic. If reality defies the forecasts and Japan Airlines unexpectedly roars back to life next year, transferring those employees back to the full-service carrier is a relatively simple process. It also avoids the labor shortages crippling the airline industry elsewhere.

Japan Airlines anticipates its domestic flying to return to 90% of pre-pandemic capacity by the end of March 2023. However, international capacity will still only be 50% of pre-pandemic capacity by then. This is mainly because ongoing inbound travel restrictions into Japan for non-Japanese travelers continue to stymie Japan Airlines’ international operations.

Source: Nikkei Asia

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