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Japan to draft aid plan for air industry: official

Japan has agreed to offer an aid package for the aviation sector, which has seen profits plummet as it is hit by the worsening global downturn, an official said.

india Updated: Feb 05, 2009 23:35 IST

Japan has agreed to offer an aid package for the aviation sector, which has seen profits plummet as it is hit by the worsening global downturn, an official said on Thursday.

The move came as struggling flagship carrier Japan Airlines (JAL) is reportedly considering asking for an emergency public loan to restore its finances as it is hit by a sharp decrease in business and holiday travellers.

Transport Minister Kazuyoshi Kaneko met Wednesday with executives of the industry's Scheduled Airlines Association of Japan.

"Minister Kaneko told the association that he understood the hardship endured by the industry and promised to offer a package of aid measures by the end of this fiscal year in March," a transport ministry official said.

"The ministry is aware that the industry is in a tough situation, with company after company now reporting very tough earnings data. We believe some kind of assistance is warranted," he said on customary condition of anonymity.

JAL, Asia's biggest carrier, and rival All Nippon Airways (ANA) are suspending or reducing flights and switching to smaller planes in their efforts to ride out the crisis.

Airlines association head Haruka Nishimatsu, who is the JAL president, led the industry delegation for their meeting with the minister and presented a letter asking for assistance.

"It was not to ask for any specific items now, but the industry has asked for a long time for reduction of landing fees. That might be one area for consideration," the official said.

However, the official and a JAL spokesman denied a media report that the airline was moving towards asking for an emergency loan from the state-backed Development Bank of Japan.

The Asahi Shimbun, which did not identify its sources, said JAL was considering asking for a loan worth tens of billions of yen (several hundred million dollars) to secure adequate capital to weather the global crisis.

Governments around the world have been pumping money into key industries to help them survive the world's worst economic crisis in decades.

China last month announced a loan of more than 25 billion dollars for the state-owned aircraft maker and tax breaks for its airlines.