Deregulation of the aviation industry
As Japan proceeds with deregulation of industries in general, the aviation industry is no exception. Deregulation efforts in the aviation market can be divided into economic deregulation and technical deregulation. Economic deregulation includes the elimination of double-and triple-track standards, the end of the supply-demand adjustment system, deregulation of requirements for entry (i.e., partial liberalisation of the departure / arrival slots), and liberalisation of airfares (i.e., introduction of the airfare band system). Recent changes have allowed new companies to enter the business of servicing regular routes. Technical deregulation is also being implemented in diverse areas, including the business operation formats (allowing joint operations, wet lease, etc.) and the qualifications of aircraft maintenance and aviation workers.
Maintaining air routes to remote islands
The 1998 recommendations by the Council for Transport Policy listed the maintenance of air routes to remote islands as one of the issues requiring study before the supply-demand adjustment regulation is abolished in 1999. As industry competition intensifies, it is increasingly unlikely that air carriers will cross-subsidize money-losing routes like air routes to remote islands by revenues from profit-making routes. As a result, airlines are expected to withdraw from deficit routes, including service to remote islands. However, such routes must be maintained as a lifeline supporting the daily lives of island residents. The government's fiscal assistance to these routes is currently limited to supplementary funding for equipment procurement and discounts on airport usage fees. The Council for Transport Policy recommended that the government should co-operate with local governments to consider providing additional assistance, including subsidising operational costs for servicing such routes.
