Japan's All Nippon Airways Co. is aggressively strengthening its international operations with Boeing Co.'s 787 Dreamliners. But its heavy reliance on the jetliner appears to be a double-edged sword.
ANA introduced a Boeing 787 in 2011, becoming the first airliner to do so in the world. It received its 50th 787 in mid-August, compared with its rival Japan Airlines Co.'s 30.
Thanks in part to the 787s, the number of passengers who traveled on ANA's international flights eclipsed that of JAL for the first time in the business year ended in March.
For ANA, the 787 is "a dream airplane," as Hideki Kunugi, senior vice president and general manager in New York, put it, as the airline was allowed to file its own requests when the jet was still in the development stage.
The fuselage of the 787 has been made lighter using composite material that includes carbon fiber, with pressure inside the cabin set higher than conventional aircraft to create conditions closer to that at ground level for passenger comfort.
Its fuel efficiency and cruising distance are better than conventional medium-sized planes -- approximately 20 percent better than the Boeing 767 -- thus making it possible to fly directly between Japan and Europe, or between Japan and the U.S. East Coast.
"With the expansion of our international routes, it was no longer possible for large aircraft like the Boeing 777 to be economically viable. The 787 enabled us to take customers to new markets which the 767 couldn't do," Kunugi told Kyodo News.
ANA, which launched international regular flight services later than JAL in 1986, adopted the 787 to bolster its routes the world over at a time when JAL was rehabilitating from its 2010 bankruptcy with taxpayers' money.
Ironically, however, ANA's heavy reliance on 787s began to backfire in late August, about a week after the carrier received its 50th 787.
ANA canceled some domestic flights due to engine defects. It also investigated a slew of cases in which its twin-engine 787s had to turn back after detection of abnormalities in their engines. The carrier's 50 Boeing 787s are all equipped with engines from Rolls-Royce Holdings PLC.
A probe by ANA and the British aviation engine maker found that some parts in the engine interior were damaged, forcing ANA to decide to replace the engines for all 50 planes and leading to massive flight cancellations.
Concerns were raised in some quarters that ANA could lose its customers to JAL and see its business performance suffer. JAL's 787 fleet remains unscathed as its planes' engines are made by General Electric Co. of the United States.
ANA Holdings Inc., the parent of All Nippon Airways, logged a record group net profit of 78.17 billion yen ($723 million) for the year through March 31.
The net profit was roughly double the amount reported a year earlier, but it fell far short of JAL's 174.47 billion yen for the same year.
"We are feeling a sense of crisis as we are nowhere near them in terms of profitability," an ANA official said.
Another challenge to ANA is likely to be renewed efforts by JAL to prop up its international operations after the Japanese government-imposed restrictions on JAL's opening of new international routes is lifted at the end of next March.
The restrictions were imposed to ensure a level playing field for competition between JAL, which used public money to get back on its feet, and other domestic airlines.
Despite the engine fiasco and JAL's imminent counterattack, ANA's 787-based global strategy remains unchanged. ANA opened a new route between Narita airport just outside Tokyo and Phnom Penh on Sept. 1.
The airline will also use the jetliner when it establishes routes between Tokyo's Haneda airport and Kuala Lumpur on Oct. 30 and between Narita and Mexico City in February next year.
ANA is also considering launching routes linking Japan to Perth, Western Australia, and to Southern Europe in the near future, with a source saying "the 787 would be a valid choice for them."
© Kyodo News International, Inc., source Newswire