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Thursday, Aug. 7, 2008

ANA set to suspend or reduce 11 routes

Staff writer

All Nippon Airways Co. said Wednesday it will suspend or reduce 11 international and domestic routes beginning this fall as it struggles with surging jet fuel costs.

Routes facing the ax include one domestic and two international, ANA said in a statement.

Flights between Chubu airport in Aichi Prefecture and Taipei will be halted Oct. 26, Kansai International-Guam flights will be suspended Jan. 13 and Nagasaki-Okinawa service will be suspended Feb. 1.

ANA attributed the suspensions and reductions to climbing oil prices. In July, crude oil was priced at $130 per barrel, around 1.4 times higher than the price in January, when the airline announced its original business plan for the year.

Now ANA estimates its fuel costs will be ¥40 billion more than last year, totaling better than ¥300 billion, it said.

"The crude oil market remains at a historically high level," ANA spokeswoman Mie Akiyama said.

The airline currently imposes fuel surcharges on international passengers, for instance ¥28,000 per person on Japan-Europe and Japan-U.S. flights. Fuel prices demanded that the airline to do more, Akiyama said.

"We judged that we would not be able to manage (our business) from now on if we do not reduce the number of flights," she said.

The routes to be closed or slashed are unprofitable, Akiyama indicated. With its latest operational review, ANA expects to cut costs by ¥2 billion to ¥3 billion, she said.

If crude oil prices continue to climb, the airline may review its operations further, she suggested, but "at present, we are not considering any further review for this fiscal year."

"However, we must continue to carefully watch the fuel market, demand trends and business environmental changes," Akiyama said. "We can only hope that fuel (prices) will soon drop."

The remaining eight routes, all domestic, will see the number of daily flights reduced.

Beginning in November, daily round trips between New Chitose near Sapporo and Sendai will be reduced to three from the current five to seven.

Flights between Memanbetsu in eastern Hokkaido and Kansai International are to be slashed from one daily round trip to only operations during the summer, ANA said.

New Chitose-Kansai flights will be cut from five daily round trips to four. Daily round trips between Tokyo's Haneda and Kansai will drop from seven to five.

Flights between Haneda and Oshima, an island south of Tokyo, will be halved to one round trip, and Kansai-Okinawa will face one round trip reduction to four.

Starting in February, flights between Kagoshima and Okinawa will be reduced from three round trips a day to one, and the Chubu-Matsuyama route will see two round trips, down by one, the airline said.

Japan Airlines Corp. is also reportedly looking to suspend unprofitable domestic and international service this fall as fuel prices rise.

Gas price sets record

Kyodo News

The national average retail price of regular gasoline hit a record ¥185.10 per liter Monday, up a whopping ¥4.40 from the previous week, the Oil Information Center said Wednesday.

The average price was the highest since the industry observer began compiling relevant data in 1987.

The week-on-week upsurge stemmed from sharp hikes effective Aug. 1 in wholesale prices of petroleum products by Nippon Oil Corp. and other oil refiners and wholesalers, themselves hit by the rise in crude import costs, the center said.

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