Sunday, January 24, 2016

Japan Airlines president pilots airline to new heights

Japan Airlines President Yoshiharu Ueki

TOKYO —  In January 2010, when Japan Airlines (JAL) filed for bankruptcy following massive financial losses, the country — and the world — sat and watched as one of Japan’s leading conglomerates turned to ashes, ruining not only its reputation, but possibly its future. “We hit rock bottom,” says JAL president Yoshiharu Ueki in retrospect. “Days went by when we wondered if there would be a tomorrow for all of us.”

Six years later, JAL now appears to stand stronger than ever.

In 2015, the company announced a six-month, record-high net profit of 103.4 billion yen—up nearly 29% year on year — and a profit forecast of 1.35 trillion yen for the fiscal year. At the beginning of this year, the company received more good news: it won the prestigious FlightStats’ “On-time Performance Service Award” for 2015, becoming the world’s top on-time air carrier for the fifth time in its history. JAL further announced plans to provide full-time employment for all of its cabin attendants — a move that surprised many in a field famous for contract-based employment and hourly wages.

The man behind these achievements is Ueki, who is fortunate enough to lead “a brilliant team” (as he says in a Kyoto dialect). Appointed to the post in 2012 by Kazuo Inamori, the entrepreneur behind JAL’s reconstruction, Ueki carries the responsibility of heading a company that “stands strong together.” Dressed in a casual suit and smiling as he slips in a joke or two during his conversation with Japan Today, Ueki appears far distant from a typical Japanese company president. Starting his career as a child actor and piloting JAL planes for 35 years, Ueki is the first Japan Airlines president to climb the leadership ladder from a non-bureaucratic post. It is a role that’s taught him that leading a company should come from the bottom up, not vice versa, as the company did for decades in the past.

Japan Today visited Ueki’s office in Shinagawa to hear more about what has changed at JAL and where the company is heading in the future.

Was 2015 a good year for Japan Airlines?

Yes, I think it was a good year overall. We were able to achieve our highest profit for the first half of the fiscal year to start off with, and we also observed a major increase in inbound travelers. I think the year was good for most Japanese airlines, including JAL.

What led to your decision to provide full-time employment for JAL’s flight attendants?

There are two main reasons: the general change in work standards and the necessity to strengthen female employment. Until now, most of our flight attendants were working on a three-year contract to start. However, we believed that the introduction of full-time employment would motivate our team to perform at their best in all aspects on the job, because it gives them more stability.

What led you to temporarily suspend flights from Narita to Paris following the Paris terror attacks?

We have two daily flights to Paris: one from Narita and another from Haneda. The flight from Haneda, a Boeing 777, can accommodate more passengers, while the one from Narita is a medium-sized aircraft. As the demand for flights drastically declined following the Paris attacks, we decided to temporarily suspend the Narita flight and instead promote the one from Haneda, which could accommodate all passengers for both flights. These are, of course, just temporary measures until demand is restored.

As the first former pilot to become a president of JAL, how does your business style differ from that of former company heads?

At JAL, we have three general divisions: administration, transportation and in-flight service. Up until now, the majority of the former presidents came from the administrative division. In reality, though, this department represents no more than 20% of all JAL Group employees. The vast majority of our employees work at the actual field: pilots, flight attendants, airport staff, mechanics. When I became president, our employees rejoiced, because for the first time in history they saw a president who knows the life outside of the administration.

For many years, JAL had friction among employees from the three departments. Rarely did we all agree and there was never true teamwork at JAL in the past. After the bankruptcy in 2010, we looked into the past and tried to learn from our mistakes. Mr Inamori appointed me president — one supported by the employees, the base of the company. I have many things to polish in my current status, but I also have skills that former presidents didn’t have. One of these skills is decision-making. For my 35 years in the cockpit, I was always exposed to risk –– the lives of 500 people were in my hands on every flight and I was put in the position of making critical decisions at crucial times. I think that’s what makes me different from former presidents. Making wrong decisions could endanger the lives of everyone onboard. The “shacho” (president) and “kicho” (pilot) are very similar: they both should take responsibility and risks while protecting the people onboard.

How does JAL intend to cope with the increasing competition from low-cost carriers (LCCs)?

The airline business has been very slow to evolve. Take restaurants as an example: there are plenty of varieties, from fast food to luxurious restaurants. The introduction of LCCs brought choice and variety to customers and I think this is a great opportunity for the promotion of air tourism. In terms of competition, however, it really depends on what grounds we’re competing with LCCs. It’s never occurred to us to compete with them over cost, for example. We compete with them over hospitality. We want to be a company that offers superior service that can trump prices and we’re happy to see that this appeals to customers. We’re proud to say that our international flights average over 86% seat reservation rate, which are very good numbers in our field.

What separates JAL from other airlines?

We promote both “hard” and “soft” services. Aircraft are ridiculously expensive: prices may go as up as ¥105 billion. But it’s crucial for us to provide modern products that are equipped with the newest and safest technology. We’re ready to replace aged machines—even if it’s costly.

In regards to in-flight comfort, we strengthened our business class by introducing the JAL Sky Suite fully flat seat. But our biggest adventure took place in economy class. We stretched the seat pitch from 31 to 34 inches on our 777 flights, allowing additional legroom of up to 10 cm, and we also decreased the number of seats to eight per row on our 787 flights. While other companies have an average of 300 seats, we have 240. In other words, it meant a potentially major profit loss for us. But we took the risk and decided to go against the trend of shrinking the coach classes in order to provide a more relaxed, spacious flight for customers. What happened to our surprise is that profits soared. We think that it’s this refined human-to-human service that makes us stand out.

That’s a bold move. Did you have second thoughts when deciding on that?

Major ones. We decided to cut the number of seats in the summer of 2010 –– right amid our bankruptcy. At that stage, we didn’t know whether the company would survive another day, yet here we were — acting boldly. There was major criticism about this move. We weren’t confident that it would work, but we trusted our instincts. It turned out well, after all.

In 2015, there were some very major disasters — terrorism, hijackings, disappearances and alleged missile attacks — that affected airlines all over the world. How is JAL tackling these potential threats?

It’s well known that we experienced hijackings in the 1970s. Since that time, we’ve implemented top-level security measures against any potential threats. Terrorism is constantly evolving, so we must also continue to strengthen security. After 9/11, for example, all airlines had to rethink how they deal with terrorism. But while many companies think that all is well as long as mechanics and security officials do their job, at JAL all employees undergo security training — even if it’s not directly related to their field of operation. We should also never forget the Mt Osutaka tragedy [JAL Flight 123 crashed there in 1985, the deadliest aviation accident in Japan that killed 520 people] and learn from it over and over again in order to never repeat it.

On a different note, the GermanWings crash was a horrible tragedy that should never have occurred. It changed the image of pilots in an instant: from heroes to villains. The cause of that tragedy was rooted in the co-pilot’s mental health, which made many wonder if that could happen on any flight. The JAL pilots are required to have mental health checks in addition to regular health checks four times a year. We deal with humans, which means that anything is possible. Thinking of every possible scenario and being ready for it makes us prepared and secured.

Is the anticipated shortage of pilots a threat for JAL?

Frankly speaking, a pilot shortage isn’t a problem for the major airlines such as JAL, ANA and their group companies. That’s mainly because we have an academy for training young pilots. We train them from scratch for approximately three four years until they obtain licenses. The pilot shortage problem is becoming serious primarily for companies that don’t invest in training, but look for professional pilots instead, who are difficult to find — mostly because they’re already employed elsewhere.

This year marks the sixth anniversary of JAL’s bankruptcy in 2010. It seems like the business is flourishing now, but how would you like to see the company evolve in the future?

JAL hit rock bottom in 2010. It was a horrid time and we hurt not only our employees and customers, but Japan as a whole. Since then we have all vowed never to experience that again and to become a strong company with solid management. The bankruptcy made us reconsider everything we had been doing until then. That’s why when we introduced our new corporate values in 2010, we promised to make our employees satisfied. We learned the hard way that nothing positive can happen if our employees are not united. They will not treat customers well if they aren’t being treated well. So, my vision for JAL over the coming years is that we should continue to make our employees happy and satisfied. That’s how we can keep growing and delivering our best.

What is your motto for educating your employees?

To never lose their sense of themselves. Young employees always start working filled with ambitions. As time passes, though, they fall into doing what everyone else does. That’s what many companies lead them into becoming, because it’s convenient for the bosses. I believe that nothing productive can come from that and that’s why I always tell my staff to be who they are. To not be afraid to stand out or speak up. To have one thing they believe in and stick to it. To not be afraid to make mistakes. That is very important for the future of the company.

Did you make any mistakes yourself when you were new to the business?

Many. I’ve been through a lot of difficult moments and I’ve learned from them. Being a pilot puts you in a very responsible position. The moment you put your hands on the control bar, the indicator is on: you can’t hide any mistakes. That’s more pressure than you can imagine! But that helped me mature professionally and personally.

You’re a busy man with a lot on your plate. What do you like to do in your free time?

I enjoy taking walks with my wife, especially during the cherry blossom season. I also enjoy interacting with all our employees — we sometimes go out for drinks and dinner together.

What was your dream when you were little? Did you always want to be a pilot?

I started being interested in aviation only after high school. Until then, I was trying everything I could: learned abacus, played violin for six years, studied this and that — and I failed at all of those. You should try listening to my violin now. It sounds as if I were playing on a radish. But once I decided on becoming a pilot, I never had any other pursuits.

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