Glen S. Fukushima
President and CEO, Airbus Japan
I have been in Japan this time for 20 years and I’ve been president of Airbus here for a bit more than five years. The aircraft industry is a challenging one, but it is prospering in the sense that worldwide demand for aircraft is growing. Over the next 20 or so years there will be a need for more than 24,000 new passenger aircraft and 850 new freighters.
The demand is being driven by population growth as well as the need for people to move for business and for tourism. And the cargo business is growing too; an increasing number of products are flown around the world.
In Japan there are two large airlines, JAL and ANA, as well as a number of smaller ones. We estimate a demand in Japan for something like 570 passenger and freight aircraft over the next 20 years.
There are now only two companies in the world that produce commercial aircraft of over 100 seats: Airbus and Boeing. For a variety of reasons, many of them historical, the Japanese airline companies have fleets that are primarily Boeing aircraft, so our challenge is to expand our small but growing market share in Japan. We didn’t establish a corporation in Japan until 2001, whereas our competitor opened an office here in 1953. JAL remains one of the few major airlines in the world that has never bought an Airbus aircraft. One of our challenges is to persuade JAL to buy Airbus aircraft.
In Japan it’s often difficult to get into the market, but once you get in, it’s often difficult to dislodge the incumbent. Japan is important to us as a potential buyer of aircraft and as a partner for industrial cooperation. We have made some progress in increasing industrial cooperation with Japanese companies. Our competitor has been working closely with Japanese manufacturers to produce aircraft in Japan.
We also want Japanese cutting-edge technologies on board Airbus aircraft, and we believe technology transfer will benefit both Europe and Japan. For instance, there are 21 Japanese manufacturers engaged in producing the A380. There’s a lot of high technology in Japan, including in areas such as carbon fibre and composite materials.
Low cost carriers
Something else that might enhance our opportunities to sell in Japan would be if there were fewer regulations hindering the development of low-cost carriers. Airbus has been very successful selling aircraft to these start-up airlines in the United States, Europe and, increasingly, in Asia; 62% of low-cost carrier customers have bought Airbus aircraft.
But operating costs are higher here than in many other countries. There are also stricter requirements on pilots than in many places, and there are many regulations and requirements related to landing rights, slots, pilot training, safety certification, etc. that make it more difficult to start new airlines in Japan than in many other countries.
The separation of Narita Airport, as an international airport, from Haneda Airport as a domestic airport has also created a disadvantage to Japan in terms of overall global air transport policy. There are many more direct air flights between Japanese regional airports and Inchon Airport in South Korea than there are between regional airports and Narita Airport. Thus, many Japanese are flying to Inchon, bypassing Narita, to catch flights to North America and Europe. Otherwise, they have to fly from their regional airports first to Haneda, then travel from Haneda to Narita.
Luckily that will change in October, when Haneda starts allowing for regular international flights. I think things are headed in the right direction, and more strategic thinking is being devoted now than in the past to developing a globally competitive air transport industry in Japan. Yet much remains to be done.
The growth areas for aircraft sales right now are China, India and the Middle East. We sell a lot more aircraft in China than in Japan; it depends on the year, but in some years we sell more than 100 aircraft in China. Actually, there are millions of people in India and China who have never flown in an airplane. Asia is also increasingly important as a manufacturing base – not just China, but also South Korea, Vietnam, Taiwan and Japan. The manufacturing of aircraft and aircraft components is a growing industry.
So, in the short term, with budget deficits and demographics, Japan faces some challenges, but in the medium and long term, I’m optimistic that Japan’s economy will do reasonably well. There’s no question that the economic centre of the world is shifting to Asia. And Japan, with its strength in high technology and its cultural and geographic proximity to the rest of Asia, will continue to grow and prosper.