Even with a beautiful new business and first class product, ANA is struggling to sell premium cabin seats and facing an unexpected dip in profit.
Blaming tightened corporate travel budgets, ANA is expected to report a decline in profit of 20% for the second half of the 2019 fiscal year. Business class demand in North America and Europe has weakened, creating a surplus in premium cabin seats that ANA has been unable to sell.
Even as ANA has introduced a beautiful new business class suite on flights to London and soon to New York and Frankfurt, demand has moved in the opposite direction expected. Overall passenger demand has remained steady, suggesting many are choosing to fly in economy class over business class.
While the U.S. to China trade war is also blamed for the slowdown, business class travel within Asia remains steady. Deteriorating relations between Japan and South Korea have been a non-factor, since routes between those two countries have long been dominated by budget carriers.
International cargo is also down by as much as 30% this year on flights leaving Japan, though last year’s particularly strong numbers may have been an anomaly.
CONCLUSION
I hate to see ANA struggle because it is one of my favorite airlines and offers a consistently superb product. I cannot wait to try ANA’s new business class suite and hope that this dip in profits is not a sign of what is to come for ANA and others.
> Read More: ANA A380 First Class Honolulu To Tokyo Review
> Read More: ANA 777-300ER First Class Chicago to Tokyo Review
It is a very nice new product. And the soft product is always great.
$18 drinks in Vegas coming out to $22 after tax and tip?
$50 resort fees?
$6400 round trip from lax to NRT on business class?
$640 a night at 4.5 star resort in Palm Springs off season?
Please, this party can only happen when people are spending other people’s money or are pulling out their credit card. All of the above were happening in 2007 as well. I suspect we are at the end of this economic expansion and all of the above are gonna go away when the reality of watching what u spend sets back in.
Also, note, how much budget Asian airline competition there is: Hong Kong Air, Hainan, China Eastern, China Southern, Xiamen come to mind. It’s a fierce market with a seat surfeit.
why anyone even likes to vacation in PSP is a mystery to me. It doesn’t have ski mountains, beaches, casinos, famous art museums, or a major foodie scene. I thought vacationing in Phoenix and Scottsdale is boring enough, but PSP takes that to a whole different level of coma.
Apparently Henry LAX is unable to Google “Palm Springs casinos” – I quite enjoyed Agua Caliente myself.
It’s also nicely driveable from an MSA of 13MM+ people.
Seems like a pretty simple solution to fill the empty seats. Lower the price. There, I fixed it.
Totally agree! Their premium product price is too high! Even premium economy is almost the same price as business…lower their prices all round and you will get more people using the product!
I wonder if they’ll eventually release more business class award space if their cabins are emptier?
Tokyo2020 has to be a shot in the arm in the short-term. Corporate partners and high-end leisure traveler.
Cargo partly inflated in prior year as US businesses have been bringing forward orders in front of the various tariffs and EMEA collaterally hurt by Asian tariffs. Perhaps they’re only talking about SK-JP relations purely from passenger, but their trade war definitely impacted the semiconductor and related business of each.
Who cares! They have a joint venture with United so they should do just fine. Plus with all of the Haneda slots bestowed upon them by the Japanese government no one should really be crying for them.
@Matthew
Because profit is lower and demand is the same or perhaps lower does that mean they will open up more award availability outside their mileage program? After all points are “currency” and I would imagine filter into their bottom line equation
I don’t see where it says business class demand *in* America, Europe has weakened.
“More manufacturers and other corporate customers have shifted to economy class for business travel to the U.S., Europe and other long-haul destinations. For travel within Asia, many manufacturers appear to have refrained from business trips.”
Not clear from the article what the source is given they haven’t reported any results yet.
My read of the above is Japanese companies have cut back on biz travel.
Another sign of a coming recession.
Indeed. A warning sign if not a bellwether. BA discounts in F in key business markets is another.
They need to change their Business route. The west coast to Japan routes are still full of the older Model Business class seats. Youd think their major route of the US on the west coast would get an upgrade as we, but nope. Don’t get me wrong I love ANA, ut their West coast service is looking dated.
Not surprised profits are down. Tried to upgrade on Vienna to Tokyo route only to be told seats available but the system would not allow it.
That’s a missed opportunity!
Can tell you what isnt helping is the fact that they doubled their prices for US to Tokyo routes along with United. 18K is INSANE for Business class
They need to lower their prices. I recently booked a return flight in biz from SGN to JFK on Air China for $2,300. Sure, ANA’s product is superior, but not for nearly twice as much!
I have been flying with them and have been their “Diamond” FF since 2007. I find that they have been steadily increasing their prices. About 2013/14 was their pricing sweet Spot with (SFO to NRT) Economy <$1200, Premium Economy $1400<x<$2300 and Business being $3000<x$4000. Their hard product has stayed the same and soft product has had very little change. I used to fly this route 1-2 times a month and now I am flying this route with other carriers. Getting to “Diamond” has definitely been tougher in the last two years. Upgrading is a super tough and so a lot of the regulars I fly with are more common in other carriers boarding lines. They have built a great brand t they may have leveraged their brand too much. Will stay with them as much as I can.