Japanese airline profits jump on tourism surge

Japan’s two-biggest airlines reported soaring profits today as a surge in tourism and lower fuel costs beefed-up their bottom line.

Japan Airlines (JAL) and rival All Nippon Airways (ANA) credited a weak yen for helping boost tourism into Japan as it makes a country often seen as too expensive much cheaper for visitors.

Plunging oil prices have also been good for carriers as it cuts down on what is often their single-biggest expense.

“The Japanese aviation industry is enjoying a sharp decline in oil prices and the growing number of visitors to Japan, which continued to sustain its bottom-line,” said Hiroshi Hasegawa, an analyst at SMBC Nikko Securities.

“If oil prices remain low for now, JAL and ANA will likely show sizable profit gains for the next fiscal year.”

The parent company of ANA said its nine-month net profit jumped 40 per cent thanks to growth in its international business, while it also announced it would buy three Airbus A380s for USD 1.25 billion as it expands its overseas routes.

ANA Holdings’ net profit in the April-December period rose to 73.3 billion yen (USD 606 billion), and the company revised up its fiscal year profit forecast by about a quarter.

JAL said net profit for the same period soared 20 per cent to 143.69 billion yen, thanks to an increase in the number of international visitors to Japan.

“Passenger traffic increased as a result of capturing the robust demand from inbound travellers especially on North America, China and Southeast Asia routes,” JAL said in a statement.

ANA said its international demand “on certain routes from Japan” were dented temporarily after the jihadist attacks in Paris in November, but it added that the impact was limited.J
AL has suspended flights between Narita airport and Paris after demand took a hit following the November attacks in the French capital.

The carrier has said it will extend the suspension until March 15.