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Japan-Update

JAL maps out global network of 500 cities in 10 years

Japanese carrier plans shift to international travelers and code-sharing

Japan Airlines' red crane logo is seen on its aircraft at Tokyo's Haneda Airport.

TOKYO -- Japan Airlines said Wednesday it will serve 500 cities around the world by fiscal 2027 in an ambitious expansion of its network aimed at the influx of international tourists to Japan.

"Up to this point, we have revolved our operations around Japanese customers," Yuji Akasaka, the incoming JAL president who starts April 1, told reporters here. "It is key to first have JAL broaden its brand recognition offshore."

The once-ailing carrier aims to achieve the significant increase in its coverage area -- a roughly 46% jump -- either through its own international routes or those of partner airlines, according to an updated business plan released Wednesday. By fiscal 2027, the company targets 50% of revenue coming from overseas sales to international flyers, up about 20 percentage points from fiscal 2016.

The carrier will continue to add flights to Asian routes and lines serving tourist destinations in fiscal 2018. A new route to the west coast of North America is also on tap for fiscal 2019. The specific cities to be added to the network will be determined later, but in general JAL will improve connections between Asia and North America.

JAL's fleet is projected at 230 aircraft at the end of fiscal 2020, or just two more than at the close of fiscal 2018. To expand its network, JAL will rely heavily on alliances and code-share agreements. This fiscal year, JAL has agreed to partner with Hawaiian Airlines and AeroMexico, among other international carriers.

Incoming JAL President Yuji Akasaka, left, and current President Yoshiharu Ueki at a news conference in Tokyo on Feb. 28.

Since filing for bankruptcy protection in 2010, JAL has concentrated on restructuring and developing profitable routes, in a break from the unfocused route expansions of the past.

"Our name may be the same, but we have transformed into a completely different company," current President Yoshiharu Ueki once said.

JAL expects an operating margin of 12.2% for this fiscal year, a high-water mark among industry peers, though the figure owes largely to a government bailout after the bankruptcy.

The newly reformed Japanese carrier will now focus on its global presence. JAL's market capitalization stood at 1.44 trillion yen ($13.4 billion) as of Tuesday, ranking it 12th among global airlines.

Domestically, JAL is nipping at the heels of 11th-place ANA Holdings, the operator of All Nippon Airways, but worldwide leader Delta Air Lines has a market value in excess of $37 billion -- 2.8 times that of JAL. The market caps of Air China and U.S.-based Southwest Airlines are also more than twice that of JAL's.  

JAL placed 16th in a 2017 customer survey conducted by Skytrax, a British ratings group. Though an improvement from 2016's 21st-place finish, JAL trailed far behind Asian competitors like second-ranked Singapore Airlines, third-place All Nippon Airways, and No. 5 Cathay Pacific Airways of Hong Kong.

Ever since JAL first released the current medium-term plan in 2017, it has vowed to transform into a truly global airline. Akasaka, who spent nearly his entire career in the aircraft maintenance segment, will be tasked with building strategic partnerships between JAL and international corporations.

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