The 45/47 System — The Convoy of the Skies

So far, we have watched the latecomer challenger ANA set out from the small wings of a helicopter and, with domestic routes and jet conversion as its weapons, climb to become one of two giants. International JAL, domestic ANA — two wings of different character came to share the same skies. But the era in which the two companies competed freely did not last long. In the early 1970s, the state drew a single line across this sky. It was an agreement on the division of business that would later come to be called the aviation constitution. In this chapter, we trace the era when regulation determined the shape of Japan’s skies — the so-called 45/47 system — from both sides of its stability and its confinement.

A Single Line Drawn by the State — The Making of the System

The name ‘45/47 system’ sounds utterly dry. Yet those numbers carried meaning. In 1970, corresponding to Showa 45, the government’s policy was approved at a cabinet meeting; in 1972, corresponding to Showa 47, it was made concrete by a directive from the Minister of Transport — these two year designations became the very name. Because this framework, in which the state defined the roles of the airlines, held strong binding force, it later came to be called the aviation constitution.

Why did the state draw a line across the sky? Behind it lay rapidly swelling aviation demand amid high economic growth, and concern over the strength of the companies bearing it. The fact that demand was rising did not mean the companies could each extend routes as they pleased; if they waged a war of attrition in a limited market, there was a danger of mutual ruin. Safe operations require commensurate investment in aircraft, maintenance, and personnel alike. So the state assigned each company its own post, and is said to have chosen the path of nurturing the industry as a whole in a stable manner while avoiding excessive competition. This was in keeping with the industrial-policy thinking of the time, which valued order over competition.

This thinking is often called the convoy method. Matching speed to the slowest ship in the fleet and advancing while protecting the whole, letting no single vessel fall behind — it was a way of thinking that guided postwar Japanese industry, seen in fields such as finance as well. Aviation, too, was placed under this method. The state took the helm, and each company sailed its own waters according to the state’s instructions. Japan’s skies became, in a sense, a managed sea, promised stability under the protection of the nation.

Three Posts — The Blueprint of the Division

So where was the line drawn? As it is generally related, Japan Airlines was to bear international routes single-handedly while also operating domestic trunk lines. All Nippon Airways was to bear domestic trunk and local routes, while also engaging in short-haul international charters and the like. And the one that mainly bore the regional local routes was Toa Domestic Airlines — the company that would later lead to Japan Air System. Three companies shared their respective posts in this arrangement.

This blueprint reflected each company’s character well. To Japan Airlines, which had borne international routes as the national flag carrier, were assigned the showpiece routes connecting Japan to the world. To All Nippon Airways, which had steadily built up domestic routes, was given the role, close to daily life, of trunk lines and local routes linking the archipelago. To the company that had borne the regional means of transport were entrusted the finer local routes. One might say that past achievements became, just as they were, each company’s post.

What the division brought was a predictable stability. If which company flew which sky was settled, reckless price-cutting competition and route-grabbing became less likely to occur. Each company could, within its assigned market, settle in to maintain aircraft, train people, and polish its service. For users, too, the environment in which operations were stable and investment in safety could continue was by no means a small benefit. In this era, Japanese aviation expanded its scale without major upheaval, and the framework of an industry centered on two giants solidified. The 45/47 system was the mechanism that underpinned that stability.

The Price of a Protected Sky — Between Stability and Confinement

But a protected sky carried a price as well. For the state to define roles meant, conversely, that the room for companies to challenge freely was narrowed. For instance, ANA’s making a full-scale entry into scheduled international routes was, under this system, long not permitted. For a company that had polished domestic routes as a challenger, the door to the world’s skies was closed off by regulation.

The suppression of competition had two sides for users as well. While stability was preserved, the motivation for companies to compete fiercely on fares and service weakened. The sight of multiple companies entering the same route and vying for users was limited, and fare reductions and the appearance of new services were, compared with a free market, gradual. A protected order can also become a lukewarm complacency. Amid the scarcity of competitive stimulus, the industry as a whole dulled its sensitivity to change — such concerns came to be voiced more and more as time went on.

In time, the era began to move in a direction that valued freedom over regulation. Around the world, the liberalization of aviation advanced, and at home, too, voices grew stronger that competition should be promoted for the sake of consumers. In 1986, the state fundamentally reviewed this 45/47 system and opened the way for companies to compete across the walls of their roles. The aviation constitution, which had governed Japan’s skies for more than a decade, met a major turning point here. From an era of stability to an era of competition — the shape of the sky was once again about to be rewritten.

The single line drawn by the state brought order and stability to Japan’s skies for more than a decade. The three companies guarded their respective posts, and the framework of an industry centered on two giants solidified. But the protected sky also carried the price of confinement, and in time the wind of liberalization would push it open. Before we move on to that story, however, we must pause. For in the very midst of the era of stability, in the summer of 1985, Japan’s skies would experience the greatest, and deepest, sorrow of the postwar period. Next time, we trace, with deep respect, the Osutaka accident and how aviation safety came to be protected from it.