The outcomes from the Joint Ventures have exceeded our expectations. By efficiently utilizing our partner carriers’ route networks and sales channels for the trans-Pacific and European long-haul businesses, the Joint Ventures have enabled us to provide a more competitive and complete solution to the market.

With the launch of the Joint Ventures, we renewed our fare structures to align with those of our partner carriers. By considering our partner carriers’ networks as part of the ANA network, our customers have the benefit of being able to combine ANA flights with flights on the extensive network of our partner carriers within the Americas and Europe as well as long-haul flights to and from Japan. As a result, as of June 2013 we currently offer discount economy class fares from Japan to 250 cities in North America, which is substantially more than the 120 cities we offered prior to the Joint Venture in March 2011. In Europe, we offer fares to 190 cities as of June 2013, up from 120 cities before the Joint Venture in March 2012. Also, prior to the Joint Venture, our fares to cities beyond ANA-served gateway cities required additional charges for other carrier segments. Through the Joint Venture, we simplified the fare structure by setting up “zones” within the Americas and Europe and offering identical fares to cities within the same zone regardless of the need for a transfer, considering our Joint Venture partner flights beyond ANA gateways as if they were our own. Such changes have strengthened the competitiveness of the Joint Venture and have contributed to stimulating demand as well as increasing our market share.

As an example, tickets for ANA-operated flights sold by United Airlines (North America–Asia routes), showed a significant increase during the past two years after the Joint Venture, which has contributed to boosting seat load factors at a very low cost. The success of our routes such as Narita–Manila and Narita–Ho Chi Minh City is a result of being able to take in demand from the ongoing growth of connecting passenger volume between North America and Asia. With the Joint Venture, we are able to coordinate the routes, frequencies and schedules of our flights with our partner carriers to offer the best solutions as well as to provide an appealing fare structure, which has enabled us to expand our global network and accomplish our strategic goals.

The Joint Ventures also have significant marketing advantages that complement the benefits of network, capacity and fare policy coordination. While non-Joint Venture code-share partner carriers cooperate in selling each other’s flights in a code-share agreement, revenues are attributed to the operating carrier, and the marketing (selling) carrier only receives a sales commission, so carriers tend to concentrate on selling their own operated flights. In a Joint Venture, however, partner carriers pool all revenues for subsequent redistribution among themselves. Under the Joint Venture agreement, unlike the regular code-share partnership, carriers therefore no longer have any reason to prioritize sales of their own flights over partner carriers’ flights. The ANA Group now collaborates with its partners in marketing under the shared goal of maximizing joint venture revenues.(Please refer to the inset on the following page for additional details.)

The ANA Group has had difficulty in the past communicating with customers outside of Japan, but the Joint Venture provides an outstanding opportunity to capture new demand through the sales networks and distribution channels of its partner carriers based in the Americas, Europe and Asia. While there is still room to strengthen joint marketing to general customers, corporate contracts are already shared within the Joint Ventures. We therefore have a much better ability to earn the business of non-Japanese corporate customers. During the fiscal year ended March 2013, non-Japanese nationals accounted for approximately 34% of passengers on our international routes, an increase of approximately 3 percentage points from the previous fiscal year.

Our Joint Ventures do not have a long history, and we are just at the stage where the framework has been established. There are still issues that need to be improved, such as joint sales. Partner carriers share large volumes of detailed data, so we need to configure and operate systems for sharing data while performing more detailed data analysis. This analysis will enable the ANA Group to provide better convenience and service than it could on its own and to deliver the added value unique to the Joint Venture that was not possible under the code-sharing agreements in the past. The ANA Group and its Joint Venture partners therefore aim to use joint sales to prevail in competition with other alliances and deliver even greater value to customers.

The international business is the key to the ANA Group’s growth. With limited operating resources, aircraft and slots, our alliance strategy is crucial to our international business expansion.

Our basic alliance strategy for prevailing in global competition is to provide customers with high-quality service and seamless travel and to maximize our earnings and revenues, which we believe are the fundamentals of the airline business. We will achieve this by effectively expanding our capacity by drawing on the strengths of our alliance and Joint Venture partners.

The global economy is changing rapidly, passenger flows are becoming more diverse, and the airline industry is constantly changing. Keeping these in mind, the ANA Group must select the best framework among its various partnerships for each scenario. Paying close attention to future changes in the operating environment and quickly implementing an innovative alliance strategy will be essential for the future growth of the ANA Group.

At the same time, we need to foster ANA Group employees who can construct an effective alliance strategy for achieving future growth. We need human resources who can effectively negotiate business with our partners on a global scale. This skill set will require expertise in the business and diversity. I see this as one of my key missions because of the experience I have gained through my time at Star Alliance headquarters and my work with our alliances.

The ANA Group is one of the leading airlines in Asia. Through our alliance strategy, we will continue to take on the challenge of leading the airline industry and consistently creating outstanding value.