Japanese airline ANA plans to tighten its belt ahead of fare hikes

© Reuters. FILE PHOTO: All Nippon Airways (ANA) Holdings Inc. incoming Chairman and CEO Koji Shibata attends a news conference in Tokyo, Japan February 10, 2022. REUTERS/Issei Kato

By Satoshi Sugiyama and Maki Shiraki

TOKYO (Reuters) – Japanese airline operator ANA Holdings Inc will only raise airfares as a last resort to cover changes to European routes, its new chief executive said on Wednesday, adding it would focus first on the tightening of the belt.

Koji Shibata, who takes over as head of parent company All Nippon Airways (ANA) from April 1, also told Reuters in an interview that the crisis in Ukraine has so far had a limited impact on earnings, because the airline had already downsized. international flights due to COVID-19.

His comments are the latest to illustrate the willingness of Japanese companies to avoid price hikes, despite soaring fuel and commodity prices. Years of deflation have made Japanese consumers ultra-sensitive to price increases and forced businesses to avoid raising prices, prolonging the economic malaise.

“We will do everything possible” to avoid price increases following the change in European routes, Shibata said.

“But we may be in a situation where we have to increase airfares slightly to make up for the amount we can’t cover by cutting costs.”

ANA, like other airlines around the world, changed its routes over Europe after the Russian invasion. The political unrest has raised uncertainty and pushed up oil prices.

Shibata, however, said soaring energy prices had a limited impact thanks to domestic flight coverage and surcharges for international flights.

Airlines are also reeling from the collapse in international travel triggered by the COVID pandemic.

It would take about two years for demand for international flights to return to pre-pandemic levels, depending on the evolution of Japan’s COVID-related entry restrictions, which are being gradually eased, and the Ukraine crisis.

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