Uh Oh: Could Japan’s ANA & JAL Merge?

Filed Under: ANA, Japan Airlines

The Japanese government is hinting at the possibility of a merger between the nation’s two largest airlines. This comes just a week after we learned that South Korea’s two largest airlines — Asiana and Korean Air — will be merging.

Japanese government considers consolidation

The government of Japan is preparing to inject capital into the country’s airlines, in particular All Nippon Airways (ANA) and Japan Airlines (JAL). With Japan’s borders mostly closed, it goes without saying that these airlines are bleeding money.

Heizo Takenaka, who served on the Prime Minister’s Growth Strategy Council, has indicated that ANA and JAL will eventually need more support, and suggests that they should become one. Stocks of both airlines shot up following this news.

It goes without saying that this is still in the very early stages, and it doesn’t sound like any decision is imminent. It’s also noted that there are many ways they could go about this, from having one airline focus on domestic operations and one focus on international operations, or even just fully integrating operations.

It’s also anyone’s guess which airline would “survive” in terms of branding. There are pros and cons to both ANA and JAL, and both airlines are competitive in many ways. Personally I don’t think there’s one choice that’s more obvious than the other.

The government could inject capital into Japanese airlines

Let’s hope this doesn’t happen

There’s one major thing speaking in favor of a merger — if the government is going to provide funding to airlines, then in the short term I can understand how it doesn’t make sense to essentially be funding two airlines that are competing with one another.

But that doesn’t consider the long term implications of this:

  • While South Korea is one of the smaller countries to have two “large” full service airlines (it has a population of 51 million people), Japan is significantly more populous, with 127 million people
  • While I get that both airlines will likely be losing money for the next couple of years, the airlines were profitable prior to the pandemic
  • Long term it would be bad for consumers for the country to only have one global airline

ANA and JAL are among my favorite airlines in the world. Presumably that’s partly because they’re Japanese, and most things in Japan are awesome. However, beyond that I have no doubt that the two airlines having to compete so fiercely with one another has been a win for consumers, and has made them as good as they are.

A merger between ANA & JAL would be bad for consumers

Bottom line

The Japanese government may be injecting money into both ANA and JAL, and it sounds like the concept of a merger between the two airlines is at least being discussed.

While I can appreciate not wanting to fund two competing airlines in the short term, the long term implications of Japan only having one global airline would be terrible for consumers.

What do you think the odds are of a merger between ANA & JAL?

(Tip of the hat to Ron)

Comments
  1. Unlike the case in Korea where Asiana has been in financial trouble for long, both JAL and ANA are operating just fine and the competition between the two is definitely beneficial for the market and the general public. It would be extremely unwise, if not bluntly stupid, to merge these two no matter how you slice it

  2. I’m in the same camp, I really really hope this doesn’t happen! Love them both for different reasons, and I like having the option when traveling there.

  3. Fingers crossed they don’t merge. Love both of them independently and competition is healthy.

    I wonder what the next merger will be. Etihad and Emirates finally?

  4. No, no, no, no, NO! What a horrible thing such a merger would be for competition and for airline service in east Asia. Unlike Korea, where Asiana has long been a weakling, ANA and JAL have long been strong competitors and that competition has kept pricing reasonable, and has lead to high quality service and value from both. A merger would undo all of that.

  5. Drawing comparisons with South Korea aren’t really accurate or balanced. Asiana was in a financial tailspin for years. It has a poor reputation when it comes to safety and while substantially smaller than Korean Air, overlaps with KE. Japan’s airlines are different. JAL has recovered well from bankruptcy and as the article here points out, pre-pandemic, both NH and JL were profitable. I suspect they’ll both shrink substantially to survive but survive they will, and as independent and separate entities.

  6. Domestic Japan flights have always been sky high. In a market without Peach, you will see 400+ dollars for round trip flights of 1000 miles on a regular basis. That is with JL and NH’s competition. If merged, I will not be surprised to see routes like ITM-AXT hit 4 digits. Unlike Korea, Japan needs domestic air travel for a much larger, island based nation.

  7. Coming from a national ‘marketing’ perspective, I would guess the surviving brand would be Japan Airlines simply because it is the linguistic ‘flag carrier.’ Ask 1,000 secondary school students which country ANA is the airline for vs Japan Airlines and my bet is the results would clearly favor one. If the government is choosing this may be a key point.

  8. I love JAL for their slightly superior on board food (at least in J) and spacious seats across ALL classes. Who else in the world (outside of private jets) flies 787-8s with just 161 seats? I know a lot of carriers who fit their 737s with more pax!

  9. @TravelManager : It could also the case of ANA taking on JAL’s name. After all, pre-pandemic, it has already been meaningfully larger than JAL domestically, and just overtook them internationally. Its Trans-Pacific JV with UA was also far more tightly knit than that of JAL-AA.

    ANA, or All Nippon Airways, already the word for Japan (yes yes i know it’s “nihon”). Why must they mention the nation’s name in English ?

    QANTAS has 6 letters and not one of them is “australia”.
    Nor any of KLM’s letters explicitly say “holland” “netherlands” or “dutch”, in any language.

    Iberia mentions the name of the peninsular it hubs in.
    Aer Lingus just means “air fleet”.
    Lufthansa, a word play of its ancient Hanseatic League heritage.

    Would you confuse them for anything else ?

    On the flip side, we definitely have a plenty of basket cases like Alitalia, Thai, SAA, Air India, and the good ole’ Malaysian Air that couldn’t even find a way to rebrand itself after 2 disasters.

  10. LOL, imagine if we forced Delta, United and American to merge and then to be called “American” because its closest to our country name. I’m sure that would go over well.

  11. @henry LAX
    like americans prefer delta than american airlines?
    I know you’ll get ticked. Haha this is fun.

  12. ANA has nicer liveries hands down. Both companies are more than just the airline, with cargo, maintenance, hotels and more. Be interesting to see if they merge all that too or sell it off.

    I agree though, would rather keep both so that they keep pushing themselves to improve through competition.

  13. Typical Japanese bureaucratic cottontop decisions. After Kazuo Inamori‘s takeover of JAL, it was working just fine and created another balance in Japanese aviation market – JAL & ANA switch positions, ANA cares more about business and consistency while JL cares more on food and alliance. This also creates a diversity in global airline alliance play: Asiana’s position is marginal within *A after SF crash and NH+BR+CA, KE+CI+MU, JL+CX+(CZ) build the balance between *A, ST and OW within northeast Asia.
    Japanese bureaucrats should be aware of this act is not only domestic, and it’s not some child’s play with only result in jokes like adding “Gateway” onto Takanawa or writing some nonsense poems. Whatever it’s JAL into ANA or vice versa, the whole transpacific aviation business will lose its balance, and we won’t know how this act would change the aviation industry.
    It’s unwise.

  14. The problem with Japan is not two airlines it is two airports. Everyone wants their international flights to go to Haneda but the connecting flights for onward travel to Asia aren’t very robust. ICn will be a better place to connect.

  15. I can definitely see this happening. Times have changed and perhaps its time to reconsider this option. I could also see the surviving carrier being limited to international flights only, leaving the domestic Japan market to a variety of low cost carriers and new entrants.

    In this industry, never say never.

  16. This guy is a former (somewhat controversial) politician tapped to serve on an economic committee. His comments about bailouts and mergers are personal opinions, not those of the government, and he indicates that the pandemic provides an otherwise unthinkable opportunity to do something radical.

    But ya got my to click (and comment even)!

  17. Really don’t hope this will happen, but if the merger was to go through, I guess the most likely and obvious name would be the two first letters from ANA + the two last letters from JAL…

  18. With light at the end of the pandemic tunnel, it would seem that the idea of a merger is largely redundant. These 2 airlines are different enough to be able to continue on separately and successfully, both belonging to rival alliances.
    There are no compelling (or sensible) reasons to merge.

  19. Using the Japanese govt’s logic, United, AA and Delta should all combine so the US govt can stop subsidizing three failing flag carriers.

  20. @henry LAX if ANA could take Japan Airlines’ name it definitely wouldn’t hesitate to do so then they could stop adding “Inspiration of JAPAN” to ANA logo all over the place just to indicate where they come from.

  21. I live in Japan and am a diamond level flyer. Currently flying once a week domestic HND-ITM. I love ANA but also JAL (former AA concierge key before I moved here). Very different cultures between the two. I prefer ANA, older Japanese guys JAL. Hope the merger doesn’t happen. Love my weekly flights, get really champagne and food service (super seat) on that 1 hour jump. Makes me happily forget the thrice weekly SFO-LAX flight where they threw you a bag of peanuts in first. Both airlines here in japan were profitable before the pandemic and they will be again. Domestic flights mostly full and at 70-80 percent frequency.

  22. Maybe just a temporary merger of the airline division only for a short period say 5 years just to get them through this.

  23. ANA’s international business service earlier this year was poor and their lounges overcrowded with lousy food. I’ve had better results flying United and eating in Polaris lounges. Maybe a merger would make them more of what they were several years ago.

  24. No mergers please.. I’ve got loads of AA miles I plan on unloading for JAL first again. What a wonderful product.

  25. They have been profitable, mainly because for some routes (e.g Akita, Aomori…) they are the only way to go and a round-tripticket costs 70,000 JPY, (same as a round-trip to France). Second, for domestic flights their service is horrible, and ANA even sometimes asks its passengers to not use the toilet during the flight. In terms of service they are veeery far from Singapore Airlines, Air New Zealand, Qatar or Emirates level. Having said that, a merge is not the important thing, the point is to have more LCC companies and that the government tries to incentivate cheap airlines (as are Ryanair, Vueling or Norwegian in Europe>, because it doesnt make sense that in Europa a 2,000 mile frip costs 60 USD while in ANA or JAL costs an average of 300. Finally, u like Japan because u dont live here and u dont know well about the taxes here and the way to work here XD

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