When the Beatles landed in Tokyo in 1966, Japan stopped in its tracks as the Fab Four faced the world’s cameras swaddled in traditional ceremonial happi coats. The lapels bore the logo of the country’s proudest international brand: Japan Airlines (JAL).
The carrier’s global reputation grew from there. As the economy boomed and Japan worked its way ever higher through the ranks of wealthy nations, JAL was the ultimate symbol of success. Today, for a nation ill at ease with itself and increasingly fatalistic about long-term decline, JAL’s bankruptcy is a blow.
For some, it is proof that the business model of Japan Inc is in crisis, for others, it is the decisive test of whether the new government of Yukio Hatoyama is serious about breaking with “old” Japan.
Undoubtedly, Japan has suffered few heavier blows to national pride.
JAL made its name flying the silk-suited executives of Japan’s unstoppable corporations around the world and into the markets they would come to dominate.
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It seemed inevitable that once JAL flew a route from Tokyo to your country, your roads would fill with Toyotas and your living rooms with Sony. And on the cultural side, it was even more powerful: as the airline that conveyed wave after wave of holidaymakers across the globe, JAL was heavily responsible for creating that icon of rising Eastern economic might – the Japanese tourist.
But in 1990, just three years after JAL’s privatisation, Japan’s property bubble burst and the country entered a slump that would stretch into a 20-year economic stupor. Once the flag-carrier of growth and expansion, JAL now became a symbol of the country’s long, fruitless struggle to recapture the glory days.
However, while unpleasant, the JAL collapse was not a surprise. Today’s bankruptcy follows years of huge government bailouts, and well-documented management failures. The taxpayer has paid several times over for JAL to stay in the air despite a total lack of commercial viability – and he knows it. Ordinary Japanese may feel a sting of shame that such a big international brand has come a cropper, but they lost any real affection for JAL years ago.
The greater question for Japan arises from the reasons behind JAL’s demise and the logic of privatising public services.
In 1987, JAL was supposedly freed from the noose of public ownership and nominally left to compete in the world. Except that it never really was: behind the scenes, it was always under pressure from the Government to maintain loss-making domestic routes and prestigious international routes.
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The former Government’s addiction to building airports – and preserving local construction jobs – was at the expense of JAL’s bottom line. And the rot soon set in. When JAL made a loss, it was always rescued with money from the public purse: a process that effectively became a charter to forgive management incompetence and reckless lack of cost control.
For all that it would like to have been the torch-bearer of a thrusting new world centred on Asia, JAL has never been anything beyond the flag carrier of “old Japan”. For those that still mentally live in that era – the politicians and businesses under the illusion that Japan can somehow work its way back to the 1980s heyday – JAL’s bankruptcy was a knife in the heart. For everyone else, it was the slaying of a demon.