Skip to: Content
Skip to: Site Navigation
Skip to: Search


Japanese Balk at JAL's Air Fares

By Keiko KambaraSpecial to The Christian Science Monitor / April 6, 1989



TOKYO

ALL of Japan seems to be in an uproar against Japan Air Lines. The reason? Tickets purchased in Japan cost far more than tickets purchased elsewhere for the same route on the same airline.

Skip to next paragraph

For example, a round-trip ticket from Tokyo to Los Angeles costs 314,300 yen - about $2,400. But a ticket from Hong Kong to Los Angeles, via Tokyo, a longer distance, costs 15,040 Hong Kong dollars - about $1,950.

So like good consumers anywhere, Japanese looked for a way around the high prices. Travel agents bought tickets, often in bulk, from such places as Hong Kong and South Korea and resold them at discount prices here.

JAL, after catching on to the practice, retaliated in February by refusing to board passengers with imported tickets until they paid the fare difference. About 35 other airlines operating flights out of Japan followed suit. JAL says it has halted losses of about 300 million yen a month from imported tickets.

``How dare a company put financial burdens on consumers' shoulders?'' asks Tamio Goto, president of Sakae Travel Service. ``JAL still offers preposterous air fares.'' He is suing JAL for refusing to accept discount tickets issued by his agency.

Even senior business leaders felt compelled to condemn JAL. The chairman of the Japan Federation of Employers' Associations labeled JAL's action ``a shame.''

JAL and other airlines, meanwhile, claim that using the foreign-bought tickets is illegal.

``It's OK to import tickets,'' says Sumitaka Kawamura, a spokesman for JAL. ``But customers must travel according to the route addressed in the ticket.''

JAL claims that a passenger with an imported Hong Kong-Los Angeles ticket has to use the Hong Kong-Tokyo part, because of the Japanese Aviation Act and International Air Transport Association regulations.

``The imported tickets are illegal in very strict terms,'' says Yujiro Yamamoto, an industry analyst, ``but they have been actually used for a long time. It is natural for people to get angry when they see something useful suddenly banned one day.''

To placate critics, JAL offered some cuts in the gap between domestic and imported ticket prices. THE air fare gap has its origins in the steep rise in the yen's value since 1985 and international airline regulations. Since the fare in any country is set in that country's currency, the rise in the yen made Japan's fares far more expensive in dollar terms. In addition, airlines are still using the exchange rate of 296 yen to the dollar set in 1973 to adjust fares, even though the actual rate is closer to 130 yen.

JAL was a semipublic national airline, under the protection of the Ministry of Transport, until it was privatized at the end of 1987. Critics say it continues to enjoy a cozy relationship with the ministry, which regulates fare levels and routes in Japan. The ministry, stung by criticism, has directed that air fares to almost every destination be cut by more than 10 percent.

JAL says its higher costs make it impossible to match those prices. ``It's very difficult to reduce fares to the level of Hong Kong and Seoul,'' says the JAL's spokesman, citing the overall lower levels of costs and wages in those nations.

JAL apparently has little incentive to change. The number of JAL's passengers increased more than 10 percent last year while the yen's rise has cut the cost of fuel prices. JAL's profits are expected to hit 37 billion yen (about $285 million) this fiscal year, up from 32.4 billion yen ($250 million) the preceding year.