January 7, 2011
Japan Airlines, now undergoing corporate rehabilitation procedures, forcibly conducted dismissals of pilots and cabin attendants at the end of last year. Tokyo University Professor Emeritus Daigo Satoshi is critical of the company’s claim that it had no choice but to cut personnel costs for business reconstruction. The following is an excerpt of an Akahata interview with Daigo, who also is an expert on corporate accounting:
There is a rumor that JAL’s personnel costs are relatively high. Some also simply believe that dismissals of pilots and cabin attendants are unavoidable for the sake of corporate reconstruction. These arguments are indisputably wrong, judging from the airline company’s reports on final accounts.
JAL allocates 17.4 percent of its total operating expenses to labor costs.
This rate is very low compared with other airlines using Narita Airport, such as All Nippon Airways (18.6), American Airlines (32.9), United Airlines (23.2), Delta Air Lines (24.1), and British Airways (24.5).
JAL made 87 billion yen in operating profits in the period between April and September last year, which was 18 billion yen more than that in the same period of the previous year. This indicates that the company has achieved rapid business growth as a result of its drastic cost reductions.
In 1993, JAL increased the labor intensity of pilots by assigning only one co-pilot on long-distance routes. This was an outrageous action, given that foreign airlines normally run long-distance flights with two co-pilots.
Considering their labor intensity, JAL’s pilots should be able to earn more than their counterparts working for foreign airlines.
JAL’s payroll costs have already become very low, threatening flight safety which should be a fundamental concern of airlines. Why does it insist that it has to further reduce labor costs at the expense of safety?
There is a rumor that JAL’s personnel costs are relatively high. Some also simply believe that dismissals of pilots and cabin attendants are unavoidable for the sake of corporate reconstruction. These arguments are indisputably wrong, judging from the airline company’s reports on final accounts.
JAL allocates 17.4 percent of its total operating expenses to labor costs.
This rate is very low compared with other airlines using Narita Airport, such as All Nippon Airways (18.6), American Airlines (32.9), United Airlines (23.2), Delta Air Lines (24.1), and British Airways (24.5).
JAL made 87 billion yen in operating profits in the period between April and September last year, which was 18 billion yen more than that in the same period of the previous year. This indicates that the company has achieved rapid business growth as a result of its drastic cost reductions.
In 1993, JAL increased the labor intensity of pilots by assigning only one co-pilot on long-distance routes. This was an outrageous action, given that foreign airlines normally run long-distance flights with two co-pilots.
Considering their labor intensity, JAL’s pilots should be able to earn more than their counterparts working for foreign airlines.
JAL’s payroll costs have already become very low, threatening flight safety which should be a fundamental concern of airlines. Why does it insist that it has to further reduce labor costs at the expense of safety?
