A Lean, Mean Operation

Japan Airlines (JAL) has experienced plenty of change in recent years, highlighted by its 2004 merger with Japan Air System (JAS). Other notable developments include the acquisition of new aircraft, a growing codeshare portfolio and future expansion at its main airports. To round off a remarkable transformation, on April 1 of this year it joined the oneworld Alliance.

Trying to keep pace with all of this is JAL Ground Services (JGS). JGS, a wholly-owned JAL Group subsidiary came into existence in October 2006 with the unification of the two operating companies formed by the JAL-JAS merger, JAL International and JAL Domestic (the single entity is now known as Japan Airlines International).

Its main job is to serve JAL requirements — aircraft ramp servicing, cargo and baggage handling, cabin cleaning and so forth — at Japan’s main airports of Narita, Haneda, Kansai, Itami, Sapporo and Fukuoka. Ground handling at other regional gateways such as Naha Airport in Okinawa is usually provided by other subsidiaries of the JAL Group or local companies not affiliated with the group. In many cases, contracted local agencies rent ground-handling equipment from JAL but use their own staff.

“Our ground-handling services are a by-word in the airline industry for quality, reliability and efficiency,” says Keisuke Hatano, director of administration and planning, operations and customer services for Japan Airlines. “In terms of quality, we provide the same high levels of service throughout Japan regardless of the size of the airport, but of course the range of services we provide differs from airport to airport. We have secured a dominant market share of ground handling in Japan and currently have contracts with some 55 international airlines.”

Continuous Improvement
Such a strong foundation hasn’t affected a desire to ring the changes in order to keep pace with the rapidly changing aviation environment. However, the inspiration for JAL’s latest strategy doesn’t derive from the airline industry. Instead, it has turned to the car manufacturing business, specifically the Toyota Production System (TPS). This was first introduced to the airline’s cargo department in 2004 and has since spread to other divisions.

“JAL is aiming at around a 10-15 percent productivity improvement using the Toyota know-how,” says Hatano.

The key word in the Toyota vocabulary is kaizen, which translates as continuous improvement — the constant search for ways to do the job better. This is achieved through a philosophy centered on eliminating three main elements: muda (waste); mura (the lack of standardization); and muri (strain).

The TPS aims to replace these three M’s — muda, mura, and muri — with the four S’s — seiri (sorting), seiton (simplifying), seiso (systematic cleaning of work area) and seiketsu (overall cleanliness).

“The ground-handling process is similar to the flow of materials and action in a manufacturing plant,” explains Hatano. “JAL planners felt there was much to be learned from the Toyota system and decided to introduce it.

“Advisors from Toyota were brought in to review our ground-handling work processes from April 2005,” he continues. “Based on their reports we are now making various improvements that will lead in particular to better time management and better resource allocation.”

Airport expansion
Such progress will be sorely needed given JAL’s future prospects. Perhaps the most important development will be the fourth runway at Haneda, Tokyo’s domestic hub and one of the busiest airports in the world. Around the same time (2010), Narita — the international gateway for Japan — is scheduled to have its second runway extended to 2,500 meters (8,202 feet).

Hatano believes these upgrades represent enormous potential for the JAL Group. “The expansion of Narita’s capacity will help us expand our profitable routes there to the maximum and will enable better aircraft utilization,” he says.

The Haneda expansion, meanwhile, is described by the JAL director as a “once in a lifetime” business opportunity. Total aircraft movement capacity will increase by 40 percent — from the current 295,650 flights a year to 407,000 in 2010. Thirty thousand of these services will be international scheduled flights on a short- to medium-haul basis — up to 2,000kms (1,243 miles). This means some giant leaps in capacity between Japan and Asian countries, notably China and Korea.

“We have to take maximum advantage of this opportunity,” says Hatano. “In terms of ground handling, we will review the size of our operations at these airports, including staffing levels, in anticipation of an increase in the number of slots allocated to JAL and an increase in the number of flights operated by foreign carriers.”

Adding to this dizzying level of growth is Japan’s determination to advance its liberalization policy, a move mainly driven by an aspiration to enhance economic ties with its neighbors. The nation’s Asian Gateway Plan will further ease access for international carriers to the country’s domestic and regional airports by adopting a more flexible approach to slot allocation. At the moment, at airports such as Kansai International and Central Japan International (Centrair), foreign airlines can’t use slots left open by their Japanese counterparts. The Asian Gateway Plan will do away with this ruling, allowing the airports to develop their international hub status.

Meanwhile, the first Airbus A380 giant to start scheduled services to Japan (Narita) is expected by the end of this year. To prepare for the aircraft’s arrival and its Code F requirements, JGS has participated in forums conducted by Airbus and plans to purchase any necessary equipment, such as towing tractors and high-lift loaders.

Reducing cost
Growth may be in the cards for JAL’s ground handling company, but Hatano is quick to note this won’t happen through a ‘no expense spared’ policy. “The main challenge facing the company is improvement of efficiency and enhancement of quality while reducing costs,” he says. “This is a common challenge facing ground handling companies worldwide. We are looking at ways to create a leaner operation that utilizes labor more effectively and reduces cost through greater efficiency, while at the same time maintaining service quality and safety.”

The relatively recent formation of JGS itself underlines this strategy. JAL’s ground handling company, Airport Ground Service (AGS), established in March 1957, and JAS’s ground handling company Toa Air Service (TAS), formed in February 1976, combined to form JGS.

The move immediately enabled the Group to streamline its ground handling activities, with a review of sub-contractor agreements and the termination of contracts rendered obsolete by the new company.

This “economies of scale” approach can be seen in the JAL-JAS integration, which also brought huge cost benefits. “We were able to combine sales and ticket offices and airport facilities including check-in counters, administration offices, flight operations departments and ground service facilities,” Hatano informs. “Taking into account staff reductions, economies through fleet reduction and other effects, the net integration was estimated at about 50 billion yen ($413,003,718 USD) for 2005.”

Hatano stresses that cost reduction doesn’t mean a relaxation either of quality or safety — indeed he describes the latter as the JAL Group’s “top priority”. The airline has successfully completed IATA’s Operational Safety Audit (IOSA) and Hatano says JAL would “welcome a program based on the same concept as IOSA to help us to further improve safety in the sphere of ground operations” — a reference to the forthcoming IATA Safety Audit for Ground Operations (ISAGO).

In fact, it seems any new ideas are welcomed at JAL. Borrowing best practices from other industries and constant innovation has allowed it to answer a range of questions posed by the airline’s growing requirements. The end result, as the Japanese would say, is kaizen.

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