Reaching altitude: The DNA of ANA

It was 31 years ago, on March 3, 1986, that All Nippon Airways (ANA) launched its first scheduled international flight, on a route from Narita International Airport to Guam.

Since then, the airline has spread its wings far and wide. And to mark the special date the president and CEO of ANA Holdings Inc., Shinya Katanozaka, spoke at Tokyo American Club to members of the American Chamber of Commerce in Japan about the DNA of ANA and the challenges of the international airline business.

TAKING WING

“When I joined ANA in 1979, Japan Airlines (JAL) was the only Japanese airline that was allowed to offer scheduled international service,” Katanozaka began. “ANA had been limited to the domestic market. It wasn’t until 1986 that we were finally able to launch our service to international areas.”

At the time, Katanozaka was in his seventh year at ANA, assigned to the corporate planning department in Tokyo. He had a “front row seat as ANA broke through the one-international-airline policy barrier.”

But it was not a turbulence-free flight. Katanozaka explained that ANA’s international passenger business operated in the red for 18 years after takeoff. “There was talk of pulling out during that difficult period,” he said. “But successive ANA presidents believed in the value of this business, and I, too, stood by that belief consistently.”

The merger of JAL and Japan Air System Co., Ltd. in 2004, along with the expansion of the Shinkansen network and a population decline, stymied ANA’s domestic growth. But, the airline persevered.

“ANA now serves 42 cities in North America, Europe, and Asia,” Katanozaka said. “And with 65 routes, our international flights are now a major pillar of our business; so I would say that we definitely made the right choice.”

FLYOVER

After a decade of perseverance, in 2010, through ANA’s resolve and against government policy, Haneda Airport regained its role as an international hub.

Along with financial challenges came global political and social ones. Katanozaka named five main issues that have impacted ANA’s business: natural disasters such as the Great East Japan Earthquake and Tsunami in 2011; instances of terrorism such as the September 11, 2001, attacks on the United States; conflicts such as the Gulf War; epidemics such as those of SARS and avian flu; and political instability such as that caused by Brexit and the recent US presidential election.

“Today’s world has been more difficult to forecast, and ANA must be vigilant because these kinds of [challenges] can have a big impact on our business,” he explained.

Nevertheless, group revenues have continued to rise under Katanozaka’s guidance. Including the full-service carrier ANA and the two low-cost carriers (LCCs) Peach Aviation and Vanilla Air, there are a total of 80 groups under ANA Holdings Inc.

Group revenues for the 2016 fiscal year were about ¥1.8 trillion, with domestic passenger revenue topping ¥700 billion and international passenger revenue reaching ¥500 billion.

Katanozaka attributes a core part of ANA’s success to the United States. “We now serve 11 cities in North America,” he said, highlighting the benefits of ANA’s partnership with United Airlines, Boeing, GE, Pratt & Whitney, and others.

NON-STOP

Looking ahead, Katanozaka outlined a mid-term strategy comprising three pillars: “The first is the growth of our international flight operations; the second is the expansion of the group’s two LCCs; the third is a strategy to target resort markets.”

The Japanese government’s goal of 40 million visitors by 2020 is a policy he described as a “strong tail wind” for the company. Introducing new routes — something Katanozaka has strongly advocated since becoming president of ANA Holdings in 2015 — is vital to achieving this goal.

Globalization is key for the growth of both the airline and the United States, Katanozaka concluded. “Protectionism and anti-globalization seem to be recent trends around the world, but airlines such as ANA can demonstrate the value of the free movement of people, products, and money, and help overcome those close-minded views.”

Custom Media publishes The Journal for the American Chamber of Commerce in Japan.

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