Productivity impact of government-led bailout of Japan Airlines

Over ten years have passed since Japan Airlines (JAL) filed for bankruptcy. This paper treats how the Japanese government undertook the bailout in January 2010 and subsequent measures to facilitate competition between JAL and the other national air carrier, All Nippon Airways (ANA). After describing the bailout process and post-bailout measures regarding slot allocation at Haneda Airport, the paper assesses the impact of these government interventions on airline productivity. Although JAL's total factor productivity (TFP) plunged with bankruptcy, they managed to turn the business around and TFP rapidly recovered thereafter to exceed that of ANA. Regression Discontinuity (RD) design analysis shows evidence of positive impact of these government interventions on TFP growth rate of the two airlines. As of 2016, JAL and ANA's TFP figures are more-or-less equal. In Japan, a new era of competition of the two legacy air carriers has emerged.