Tuesday, January 14, 2014

CoachFlyer HC330: MSJ - OKD on Hokkaido Air System's Saab SF340.

Travel date: July 2013
Flight: HC330
Route: Misawa (MSJ/RJSM) - Sapporo/Okadama (OKD/RJCO)
Carrier: Hokkaido Air System (HC/NTH)
Aircraft: Saab SF340B-WT JA03HC
Class: Economy
Direct distance: 268 km (167 miles)
Flight time: 48 minutes

Little known outside of Japan, or even the northernmost major island of the Japanese archipelago, Hokkaido Air System (HC/NTH), often unofficially referred to as HAC ("H"okkaido "A"ir System "C"o., Ltd.), has been plying regional intra-Hokkaido routes since 1998. Originally founded jointly by Japan Air System (JD/JAS) and the Government of Hokkaido in September 1997, it was formed to provide high-speed public transportation between its major cities as well as the satellite islands in this by far the biggest and most rural prefecture of Japan. Acronym HAC was chosen over HAS to avoid confusion with a company named Hokkaido Air Services, which was based at Sapporo/New Chitose (CTS/RJCC) running food and souvenir shops. Operations were launched in March 1998 connecting Hakodate (HKD/RJCH), the third biggest city in Hokkaido, with Asahikawa (AKJ/RJEC), the second biggest, and Kushiro (KUH/RJCK) using Saab SF340Bs. However, losses quickly mounted, and the airline kept on borrowing cash from the Hokkaido government.
Saab SF340B-WT JA01HC, the only aircraft so far in the new livery, at Okadama. (Photo: Ryosuke Yano)

HAC's aircraft wore JAS's rainbow colors until JAS was merged into Japan Airlines (JL/JAL) in 2002, when they adopted the 'Arc of the Sun' livery. In 2010, owing to JAL's financial troubles, the parent decided to pull out of managing HAC, and after a heavily-negotiated deal, all but 14% of its shares were transferred to municipalities HAC served and Hokkaido's local businesses in March 2011. Shut-down was avoided and HAC received another 1 billion JPY injection from the Hokkaido government, enabling them to simplify its operations by abandoning New Chitose and concentrating on Sapporo's downtown Okadama (OKD/RJCO), introduce a new livery, and launch its own reservations system (it had relied on JAL).
View from HC330, northbound. (Photo: Ryosuke Yano)

However, coupled with a landing incident and a maintenance mishap that were well covered by the media, together with transition costs, HAC continued to bleed cash and in February 2012, declared a balance cash insolvency, with cash reserves of just 4 million JPY and a record 560 million JPY loss for fiscal year ending in March 2012. After hiring various accounting firms to analyze HAC's assets and help lay a Plan B, Hokkaido decided to cover for at least 200 million JPY of the losses and lend more cash, and hired former JAL Safety Operations Manager Chihiro Tamura as President to implement a new road to recovery. Route rationalization came and operations at Asahikawa and Memanbetsu (MMB/RJCM) were closed down by January 2013, meanwhile increasing frequency on the relatively profitable Okadama -Hakodate and Okadama - Kushiro routes.
Inside the seat pocket. FLY HAC is their hand-made magazine. (Photo: Ryosuke Yano)

Seeing an only intra-Hokkaido network as limited for growth, HAC ventured outside of Hokkaido for the first time in a decade, when they launched Okadama - Misawa (MSJ/RSJM), in eastern Aomori prefecture on July 1st. Misawa itself had lost a connection to Hokkaido when JAL pulled out of that route in 2007. So I and my wife booked on flight HC330 from Misawa to Okadama to taste the reborn HAC. Arriving at the airport's free parking lot (just a two-minute walk farther than the charged one), we were already checked-in at 1110. Other than HAC, JAL is the only airline serving Misawa, having inherited the destination from the merger with JAS in 2002, with three flights from Tokyo/Haneda (HND/RJTT) and a single flight from Osaka/Itami (ITM/RJOO), both daily, so naturally, JAL provides check-in and ground handling for HAC here. As space is limited on the 36-seat turboprop, carry-on baggage is limited to one piece within 35 x 45 x 20cm and 10kg, and a check-in baggage allowance of one suitcase within 120 x 60 x 50cm and 20kg is provided. With no two flights departing at the same time, security was a breeze, and boarding started at 1125. 
The cabin of HAC's Saab SF340B. (Photo: Ryosuke Yano)

As it's a SF340, we boarded from the apron. At 1134, the door was closed and engines were started, and we were moving on our own at 1144, nine minutes behind schedule. As we reached the threshold of Runway 10, the captain told us that we would be on hold for nearly 10 minutes to wait for an incoming military aircraft. Misawa shares its single runway with the adjacent Japan Self Defense Force (JSDF) and U.S. Air Force (USAF) bases. So it was not until 1157 that we took off from Runway 10, immediately banking left and heading north along the shore. Seat-belt signs were turned off at 1205, and four minutes later, the single flight attendant started handing out blankets followed by candies. Bottled water and green tea were available when requested. Young fliers received a small airplane toy, a picture book, along with a small packaged snack. HAC has its own in-flight magazine named 'FLY HAC', all hand-made by its employees, giving passengers the impression of a small family-run airline. Its staff write articles about the sightseeing spots and local cuisines at the airline's destinations, print them, and bind them in a transparent plastic folder. 
Aomori's Shimokita Peninsula seen from the southbound flight back to Misawa. (Photo: Ryosuke Yano)

Captain Sakamoto made his announcement at 1212, apologizing for the delay and reported that we were cruising at 4,600m (15,000ft) at 470kph (290mph). We had a smooth cruise, however, the clouds below us were thick, obstructing what would be a beautiful scenery of Aomori's Shimokita penninsula and Hokkaido's vast land and picturesque mountains (I did get a spectacular view on the way back to Misawa. Photos posted!). At 1225, the flight attendant announced that we would be descending soon, and started collecting anything we would like to discard. Seven minutes later, we had begun our descent. Seat-belt signs were turned on at 1236 and we flew right over and passed Sapporo city, heading north then making a sharp turn to the right, for a final approach to Okadama. We touched down on Runway 14 at 1245, and came to a stop in front of the compact terminal three minutes later, 13 minutes behind schedule. Total flight time was 48 minutes. 
Lake Toya seen from the southbound flight back to Misawa. (Photo: Ryosuke Yano)

We deplaned to the tarmac and walked to the terminal building, and our baggage was out in just a few minutes. Okadama's simple terminal consists of three floors; the arrivals hall and check-in counters are on the first, the departures hall along with a restaurant and souvenir shop are on the second, and an observation deck is on the third. The Sakae-machi subway station is a five-minute bus ride from the airport, and from there would take 12 minutes to downtown Sapporo. New Chitose, the much larger main international airport serving Sapporo, is a 40-minute express-train ride or a 1.5-hour bus ride from downtown. Although HAC has been the sole user of Okadama since 2010, when ANA subsidiary Air Nippon Network (EH/AKX) left to concentrate on New Chitose (the opposite of what HAC did), Fuji Dream Airlines (JH/FDA) conducted a test flight to Okadama from Nagoya/Komaki (NKM/RJNA) in July with an Embraer ERJ170 and has announced its intention to start seasonal and charter operations, leveraging the airport's proximity to downtown. Year-round jet operations are still thought to be difficult, unless the 1,500m runway is extended. 
Mt. Yotei seen from the southbound flight back to Misawa. (Photo: Ryosuke Yano)

HAC now operates five Okadama - Hakodate round-trips, four Okadama - Kushiro round-trips, and a round-trip each for Okadama - Misawa, Hakodate - Misawa (seasonal), Okadama - Rishiri (RIS/RJER), and Hakodate - Okushiri (OIR/RJEO), with a trio of Saab SF340Bs. Its ownership portfolio includes Hokkaido Government with 36.47%, JAL with 14.49%, City of Sapporo with 13.53%, City of Hakodate's 5.02%, Hokkaido Bank's 4.74%, North Pacific Bank's 4.74%, Hokkaido Electric Power's 4.74%, City of Kushiro's 3.04%, Seicomart's 1.97%, City of Asahikawa's 1.01%, Hokkaido Chuo Bus' 1.01%, Sapporo Breweries' 1.01%, etc. In July, HAC restarted code-sharing with JAL, and for the first time launched its own frequent-flyer program 'HAC Flight Points', where passengers can get a point effective for two years for a one-way ticket; six points can be redeemed for a model airplane, 12 for a one-way ticket, and 24 for a round-trip ticket.
Okadama's compact terminal seen from the tarmac. (Photo: Ryosuke Yano)

Together with offering more fare choices and running promotions, HAC reported for August 2013 (high season; Obon homecoming month) passenger numbers increasing by 28.6% and a load factor increase of 19.4% to 71.8% compared to one year ago. The newly-launched Okadama - Misawa route also had 69.3%. The 2013-2014 end-of-the-year-to-new-year holiday season saw a system-wide load factor of 64.3%, with the Okadama - Misawa route producing a similar figure. Being profitable in providing local commuting services in rural areas is not an easy mission, but it is certainly a necessary means of travel in Hokkaido where fast and frequent trains ubiquitous in other parts of Japan are almost non-existent, and what would be a several hours car drive could be reduced to merely a half-to-one-hour hop. Years of dependency on JAS (and later JAL) and subsidies from local governments brought about operational inefficiencies and slow-to-respond management, however, the financial difficulties of JAL and HAC itself now having one leg in the grave, HAC is finally making changes. Exploring opportunities beyond Hokkaido has been just one of many.
HAC's check-in counters at Okadama. (Photo: Ryosuke Yano)

In a surprise move on September 18th, JAL announced intentions to re-invest in HAC and bring its ownership up to 51% as early as 2014, together with plans to restart up to 10 rural routes that were abandoned during its restructuring. Whether those who believed could turn HAC around by themselves are sighing, or those who thought of demise as unavoidable are relieved, is not sure, as some analysts viewed the announcement as JAL's tactic to get the bigger share of additional international slots at Haneda being allocated from March, 2014. Investing in public transportation in rural areas is one of the many factors considered by the government when allocating slots at the heavily-regulated airport. Eventually, on October 2nd, 2013, ANA received 11 and JAL just five of the additional daily daytime international slots, which led to JAL strongly criticizing the government and requesting clarification about the decision process. 
Our JA03HC at Okadama. It still wears JAL's 'Arc of the Sun' livery. (Photo: Ryosuke Yano)

Whatever the outcome of JAL's planned re-involvement, HAC is still clinging to its life after two major near-bankruptcies, and recent efforts and positive results are having itself and especially local governments in Hokkaido hoping for a third-time lucky.

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