Japan Airlines (JAL) today released the updated version of the company's Medium Term Management Plan – Rolling Plan 2018.
In order to realize the 'JAL Vision' introduced in 2017, the Rolling Plan highlights concrete details to achieve the key goals as outlined below. The plan focuses on a concept called the '10 Year Grand Design' which encompasses the next 3 years, as well as the company's goals after the year 2020. As the company heads into the initial year of the Grand Design period, JAL will accelerate growth through innovation, while catering to the demand that comes with the 2020 Olympics/Paralympics in Tokyo, and contributing toward the country's target to welcome 40 million inbound visitors in the next 3 years.
Positioning and Direction – Review of the 2017 Plan
The JAL Vision equation states that by “Transforming JAL into a truly global airline” multiplied by “Creating new values one step ahead of competitors,” this will equate to “Achieving Sustainable Growth” for the company. Over the past year, JAL successfully challenged itself to open new routes, found new partnerships with successful air carriers, and launched a world-class passenger reservation system. In addition, the carrier was the first to offer free Wi-Fi on Japan domestic flights, established a new prepaid card business in FinTech, and invested in Boom Technology as ways to create new values in the industry.
JAL will continue to embrace new challenges and refine the full service carrier business, while investing in new technologies to realize the vision to achieve sustainable growth.
Innovate Better Products and Services – Refining the Full Service Carrier Business Model
Expand global traffic using the dual hub network of Narita and Haneda, while cooperating with partner airlines.
Enhance Products and Services
Provide customers with a truly comfortable travel experience with highly personalized services in a timely manner.
Expanding Business Domains
Develop and cultivate growth businesses by leveraging JAL’s assets, knowledge and customer base.
Update on JAL Management Targets
The target to realize “zero aircraft accidents” and to have “zero serious incidents” each year was not achieved in 2017, as the company recorded one serious incident. The company will continue to hold safety awareness education seminars based on the concept of the “Three Actuals” (actual place, actual object, actual people) while implementing a risk management system capable of grasping any signs of issues based on a cutting-edge integrated database, which will assist to attain these safety targets.
In order to achieve the highest levels in customer satisfaction, JAL measures this statistic by utilizing the NPS (Net Promoter Score) index. When compared to FY2017-Q1 scores, JAL's domestic flights improved 1.4 points and 2.1 points for international flights. By the year 2020, the company aims to improve this index by 5.3 points for domestic and 4.5 points for international flights, when compared to FY2017-Q1 scores. By refining JAL’s strengths and utilizing ICT/IoT capabilities, the company looks to deliver exceptional customer service skills and attempt to meet the needs of diversified customer groups around the world.
Currently, the target is to achieve 10% or above in operating profit margin and 9% or above ROIC (Return on Invested Capital). In FY2017, the company is expected to surpass these expectations by reaching 12.2% in operating profit margin and 9.5% for ROIC. JAL will continue to enforce a profit-focused management style and emphasize lean management practices to achieve these targets in years to come.
Concept of the Grand Design
In a proactive spirit to look beyond the year 2020, JAL has incorporated the concept of the Grand Design in its Medium Term Management Plan. The idea is to create specific individual targets for the next ten years and to reach each goal one at a time. By doing so, the company aims to maintain an operating profit margin of 10% or above, achieve two trillion yen in operating revenues, reach two hundred fifty billion yen in operating profit and attain market capitalization of three trillion yen.
For additional details, please refer to the attached file. JAL will announce further details when new network, product and service enhancements are decided.