Japan Air Cuts China Flights Amid Spat; Shares Decline

Japan Air Cuts China Flights Amid Islands Spat
A couple look on as a Japan Airlines Co. aircraft approaches to land at Haneda Airport in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

Japan Airlines Co. cut flights to China as a dispute over uninhabited islands in the East China Sea spurs travel boycotts and street protests. The carrier’s shares, which relisted on the stock market this week, tumbled.

The airline will reduce services to Beijing and Shanghai starting Oct. 10 until Oct. 27, it said by e-mail today. All Nippon Airways Co. will fly smaller planes to Beijing from Oct. 17 until Oct. 31, it said in a separate statement.

Japan Airlines fell 4.3 percent in Tokyo trading, dropping below its initial public offering price for the first time since returning to the stock exchange two days ago after an $8.4 billion IPO. China Southern Airlines Co. and other Chinese carriers have also pared services to Japan amid a boycott that prompted the cancellation of as much as 40 percent of planned trips to Japan last week by Chinese holidaymakers, according to Citigroup Inc.

“The announcement that JAL is cutting China flights triggered a surge in selling that added to an already weak showing in the morning session,” said Takashi Hiroki, chief strategist at Monex Securities in Tokyo.

Japan Airlines, which was priced at 3,790 yen in its IPO, closed at 3,680 yen today. ANA shares were unchanged.

Canceled Reservations

A total of 12,000 seat reservations from September to November on Chinese routes have been canceled, said Sze Hunn Yap, a spokeswoman at JAL.

Japanese companies have also closed shops and factories in China because of safety concerns and protests sparked by the spat over the sovereignty of the islands, known as Diaoyu in Chinese and Senkaku in Japan.

Cancellation rates for vacations in Japan may increase further ahead of weeklong Chinese holidays starting Oct. 1, Citigroup analysts Vivian Tao and Rigan Wong wrote in a note today. The effect on Chinese carriers will be “manageable,” they said.

Japan’s Tourism Agency sees “no big impact” in the long term from the island disagreement, its head Norifumi Idee told reporters in Tokyo today.

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