All Nippon Airways (ANA) - Strategic Analysis and Outlook Report (2026)

All Nippon Airways (ANA) stands as Japan’s largest airline and one of Asia’s most prominent aviation groups, navigating a transformative period marked by robust financial recovery, strategic acquisitions, and ambitious expansion plans.

As the aviation industry continues its resurgence, ANA Holdings has positioned itself for sustained growth through operational excellence, fleet modernization, and a comprehensive multi-brand strategy.

Our comprehensive analysis report examines ANA’s current performance, strategic initiatives, and future trajectory as the carrier moves into 2026 and beyond.

Table of Contents

• Corporate Overview and Organizational Structure

• Financial Performance and Recent Results

  • Fiscal Year 2025 First Half Performance

  • Revised Full-Year Forecast for Fiscal 2025

  • Segment Performance Analysis

• Strategic Acquisition: Nippon Cargo Airlines Integ …

  • Strategic Rationale and Benefits

  • Integration Progress and Codeshare Operations

• Fleet Composition and Modernization Strategy

  • Current Fleet Overview

  • Aircraft Procurement and Delivery Schedule

• Network Expansion and Route Development

  • International Route Strategy for 2025-2026

  • Domestic Network Optimization

• Market Position and Competitive Environment

  • Duopoly Dynamics with Japan Airlines

  • Competitive Advantages and Differentiation

• Low-Cost Carrier Strategy: Peach Aviation

  • Peach Performance and Operations

  • AirJapan Consolidation Decision

• Cargo Business Evolution and Strategy

  • International Cargo Performance

  • Domestic Cargo Operations

  • Strategic Cargo Initiatives

• Sustainability Initiatives and Environmental Strat …

  • Carbon Reduction Targets and Progress

  • Sustainable Aviation Fuel Initiatives

  • Operational Efficiency Improvements

  • Environmental Recognition

• Technology and Digital Transformation

  • Operational Technology Innovations

  • Customer-Facing Digital Enhancements

  • Digital Recognition and Leadership

• Market Demand Dynamics and Travel Trends

  • Inbound Tourism Boom

  • Outbound Travel Recovery Challenges

  • Domestic Market Stability

• Industry Challenges and Risk Factors

  • Labor Shortage and Human Capital Constraints

  • Geopolitical and Economic Uncertainties

  • Aircraft Supply Chain Disruptions

  • Fuel Cost Volatility

  • Environmental Regulations and Compliance Costs

• Outlook for 2026 and Strategic Priorities

  • Financial Projections and Growth Trajectory

  • Strategic Priorities Through 2026

  • Multi-Brand Strategy Evolution

• My Final Thoughts

Corporate Overview and Organizational Structure

ANA Holdings Inc., headquartered in Tokyo, operates as the parent company of the ANA Group, which encompasses multiple aviation and travel-related businesses.

Founded in 1952, the company has evolved into Japan’s largest airline by passenger volume and fleet size, maintaining the greatest passenger market share for both domestic and international routes among Japanese carriers.

The group’s organizational structure reflects a sophisticated multi-brand approach designed to capture different market segments:

Core Airline Brands:

• ANA (All Nippon Airways): The flagship full-service carrier operating domestic and international routes with premium service standards

• Peach Aviation: Japan’s leading low-cost carrier (LCC) focusing on domestic and regional Asian markets

• AirJapan: A hybrid carrier launched in 2024 to serve international routes with a medium-haul focus

Supporting Business Segments:

• Airline-related services (ground handling, maintenance, and airport operations)

• Travel services through ANA sales and tourism divisions

• Trade and retail operations including duty-free and souvenir wholesale businesses

• Other businesses encompassing facility management, real estate, and training operations

This diversified portfolio allows ANA Holdings to address various customer segments while maintaining operational flexibility and revenue diversification. The company structure demonstrates a deliberate strategy to maximize market penetration across different service tiers and geographical regions.

Financial Performance and Recent Results

Fiscal Year 2025 First Half Performance

ANA Holdings delivered solid financial results for the six months ended September 30, 2025, demonstrating continued recovery momentum despite facing operational challenges.

The company reported operating revenue of 1,190.4 billion yen, representing an 8.3 percent increase compared to the same period in fiscal year 2024.

While operating revenue increased substantially, operating income decreased by 13.1 percent to 97.6 billion yen.

This decline primarily resulted from increased expenses, including the reduction of government fuel cost subsidies that had supported the industry during the recovery period, as well as continued investments in human resources to address labor shortages affecting the Japanese aviation sector.

The company achieved net income attributable to owners of the parent of 76.0 billion yen for the first half, down 5.8 percent from the prior year period.

Despite this decrease, the results reflect strong underlying demand for air travel and successful capacity management across the network.

Revised Full-Year Forecast for Fiscal 2025

Demonstrating confidence in its business trajectory, ANA Holdings revised its full-year forecast upward in October 2025.

The updated projections reflect better-than-expected performance in the first half and favorable market conditions:

Full-Year FY2025 Revised Forecast (ending March 31, 2026):

Operating Revenue: ¥2,480.0 billion (increased from ¥2,370.0 billion)
  - Increase of ¥110.0 billion from previous forecast
  - Growth driven by strong passenger demand and NCA consolidation

Operating Income: ¥200.0 billion (increased from ¥185.0 billion)
  - Increase of ¥15.0 billion from previous forecast
  - Reflects operational efficiency improvements

Ordinary Income: ¥194.0 billion (increased from ¥175.0 billion)
  - Increase of ¥19.0 billion from previous forecast

Net Income: ¥145.0 billion (increased from ¥122.0 billion)
  - Increase of ¥23.0 billion from previous forecast
  - Includes extraordinary gain from NCA acquisition

The upward revision stems from multiple factors, including lower fuel costs due to favorable market prices, yen appreciation benefits realized during the first half, and the anticipated boost from the Nippon Cargo Airlines (NCA) consolidation completed in August 2025.

The company maintained its dividend forecast at 60.0 yen per share, reflecting stable shareholder returns.

Segment Performance Analysis

Air Transportation Segment:

The air transportation segment generated operating revenue of 1,081.9 billion yen, up 8.1 percent year-on-year, while operating income reached 95.2 billion yen, down 12.9 percent. This segment encompasses ANA’s flagship operations, Peach, AirJapan, and the newly acquired NCA cargo operations.

International passenger services performed exceptionally well, supported by robust inbound tourism demand to Japan and successful capture of leisure demand from Japanese travelers.

The company reported passenger numbers of 4,298,022 on international routes for the six-month period, up 10.2 percent from the previous year, with load factors reaching 80.3 percent.

Domestic passenger services also showed strength, with 22,566,664 passengers carried, representing a 4.1 percent increase. The load factor stood at 77.3 percent, demonstrating effective capacity management and sustained demand for domestic travel.

Airline-Related Services:

This segment achieved operating revenue of 173.8 billion yen, up 10.5 percent, with operating income of 3.9 billion yen, up 29.2 percent.

Growth came primarily from expanded airport ground support services for foreign airlines and increased international cargo handling volumes, reflecting the broader recovery in international aviation activity.

Trade and Retail:

Operating revenues reached 72.9 billion yen, up 13.7 percent, with operating income of 3.5 billion yen, up 33.8 percent.

Performance was driven by increased passenger traffic associated with major events like the Osaka-Kansai Expo, benefiting the tourist souvenir wholesale business and semiconductor-related electronic component sales.

Strategic Acquisition: Nippon Cargo Airlines Integration

One of the most significant developments for ANA Holdings in 2025 was the completion of the Nippon Cargo Airlines acquisition on August 1, 2025.

After obtaining approval from relevant authorities, ANA Holdings acquired all shares of NCA through a simplified share exchange with Nippon Yusen Kabushiki Kaisha (NYK Line), NCA’s former parent company.

Strategic Rationale and Benefits

The NCA acquisition transforms ANA into a comprehensive combination carrier, integrating NCA’s specialized freighter expertise with ANA’s extensive passenger and cargo network. NCA operates large freighter aircraft connecting Japan with Europe and North America, complementing ANA’s belly cargo capacity on passenger flights.

The integration created Japan’s largest combination carrier and positions the combined entity as the world’s 14th largest airline group by cargo tonnage. Key strategic benefits include:

Network Synergies:

• NCA’s freighter routes between Japan, Europe, and North America complement ANA’s passenger network

• Expanded cargo capacity enables more flexible response to market demand

• Combined operations allow optimization of freighter deployment based on demand patterns

Operational Efficiency:

• Consolidated cargo operations eliminate duplication

• Shared resources and expertise improve operational performance

• Enhanced bargaining power with suppliers and customers

Revenue Growth Potential:

• Access to NCA’s established customer relationships in the freight forwarding industry

• Ability to offer comprehensive logistics solutions combining passenger belly capacity and dedicated freighters

• Capture of high-value cargo segments such as AI server components and time-sensitive shipments

Integration Progress and Codeshare Operations

The financial consolidation of NCA began from the second quarter of fiscal 2025, with the deemed acquisition date set as July 1, 2025. In October 2025, ANA and NCA launched codeshare operations on cargo flights connecting Japan with Europe and North America, effective October 26, 2025.

The codeshare arrangement allows both airlines to market each other’s cargo capacity, providing customers with expanded options and improved connectivity.

During the first half of fiscal 2025, NCA generated international cargo revenues of 63.4 billion yen despite challenges from declining cargo demand on China-to-North America routes due to US tariff policies.

The acquisition contributed a gain on bargain purchase of 7.165 billion yen, recorded as an extraordinary gain in the financial statements. Management expects the integration to drive further profit expansion as operational synergies materialize and network optimization progresses.

Fleet Composition and Modernization Strategy

Current Fleet Overview

ANA operates the world’s largest Boeing 787 Dreamliner fleet, a strategic decision that provides operational flexibility and fuel efficiency across both domestic and international networks.

As of 2025, the airline’s fleet composition reflects its commitment to modern, environmentally efficient aircraft:

Boeing 787 Fleet Leadership:

• ANA maintains more than 90 Boeing 787 aircraft across the -8, -9, and -10 variants

• The airline pioneered the 787 program as the launch customer for the -8 variant

• The 787-10 serves high-density domestic routes with enhanced capacity

• The 787-9 operates on long-haul international routes to Europe, North America, and Asia

Wide-body Fleet:

• Boeing 777-300ER aircraft for flagship international routes

• Boeing 777-200ER for medium-haul international operations

• Boeing 777-9 aircraft on order for future delivery

• Boeing 767-300ER for domestic and regional international routes

Narrow-body Fleet:

• Boeing 737-800 for domestic operations

• Boeing 737 MAX 8 on order for fleet modernization

• Airbus A320neo family aircraft on order for operational flexibility

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Aircraft Procurement and Delivery Schedule

ANA’s aircraft procurement strategy focuses on replacing older, less efficient aircraft with modern models while expanding capacity to meet growing demand. For fiscal 2025, the airline planned to add 10 aircraft, consisting of two Boeing 787-9 aircraft, three Boeing 787-10 aircraft, and five Airbus A321neo aircraft.

In February 2025, ANA Holdings announced its largest aircraft order in company history, committing to purchase 77 aircraft valued at more than 2 trillion yen. The comprehensive order includes:

This substantial order prepares ANA for anticipated international demand growth while supporting its goal to establish a fleet of 100 Boeing 787 aircraft by fiscal 2030, reinforcing its position as the world’s leading 787 operator.

Network Expansion and Route Development

International Route Strategy for 2025-2026

ANA has pursued aggressive international network expansion to capitalize on strong inbound tourism demand and recovering business travel. For the winter 2025-2026 schedule beginning October 26, 2025, the airline announced significant frequency increases on key international routes from Tokyo Haneda and Narita airports.

New Route Launches:

The airline introduced three new European routes in the second half of fiscal 2024 that continued through 2025:

• Tokyo Haneda to Milan (Malpensa)

• Tokyo Haneda to Stockholm (Arlanda)

• Tokyo Haneda to Istanbul (Airport)

For 2026, ANA planned additional route launches including:

• Tokyo Narita to Brussels

• Tokyo Narita to Perth, Australia

• Expansion to Mumbai, India

Frequency Increases:

The international expansion focuses on three strategic priorities: strengthening connections to major business hubs in Europe and North America, capturing leisure demand to resort destinations, and building market share in growing Asian markets.

Domestic Network Optimization

While international operations capture headlines, ANA’s domestic network remains the foundation of its business, generating substantial passenger volumes and connecting regional cities across Japan.

The airline operates comprehensive domestic services from major hubs including Tokyo Haneda, Osaka Itami, Nagoya Chubu, Sapporo New Chitose, and Fukuoka.

For fiscal 2025, ANA and Peach combined planned to operate at 101 percent of fiscal 2024 domestic flight numbers, reflecting continued strong domestic demand. The airline strategically deployed additional flights during peak periods such as summer vacation and holidays, particularly on popular routes including:

• Tokyo Haneda to Okinawa Naha

• Nagoya Chubu to Sapporo New Chitose

• Osaka Itami to various regional destinations

• Tokyo Haneda to major regional cities

The domestic network serves multiple strategic purposes: feeding traffic to international flights through Haneda and Narita hubs, serving point-to-point leisure and business demand, and maintaining ANA’s dominant market position against competitor Japan Airlines (JAL).

Market Position and Competitive Environment

Duopoly Dynamics with Japan Airlines

The Japanese aviation market operates as an effective duopoly, with ANA Holdings and Japan Airlines dominating both domestic and international operations. This market structure creates both stability and intense competition between the two carriers.

Market Share Distribution:

ANA holds the largest passenger market share among Japanese carriers for both domestic and international routes, though JAL maintains strong competitive positions in premium segments and certain international markets.

The competitive dynamics between the two carriers drive service quality improvements and network development across the industry.

Recent performance comparisons show both carriers achieving strong revenue growth through the first half of fiscal 2025, though with different strategic emphases:

Comparison Metrics (First Half FY2025):

ANA Holdings:
- Operating Revenue: ¥1,190.4 billion (+8.3% YoY)
- International passenger strength from inbound tourism
- Largest 787 fleet globally
- Multi-brand strategy with Peach and AirJapan
- Recent NCA acquisition for cargo expansion

Japan Airlines:
- Operating Revenue: ¥471 billion for Q2 (+11% YoY)
- Strong premium cabin performance
- Focus on profitability over market share in some segments
- Growing international presence
- Partnership emphasis through oneworld alliance

Competitive Advantages and Differentiation

ANA has developed several competitive advantages that support its market leadership position:

Operational Excellence:

The airline consistently receives recognition for service quality and operational performance.

In 2025, ANA earned the APEX World Class rating for the second consecutive year, the organization’s highest honor. The airline also received the Executive Leadership: Asia-Pacific Award from FlightGlobal, recognizing its excellent management strategy and improved customer experience value.

ANA’s commitment to safety and operational reliability underpins its premium brand positioning. The airline maintains integrated safety management systems and invests continuously in crew training and aircraft maintenance.

Network Breadth:

As Japan’s largest airline by passenger volume, ANA operates the most comprehensive domestic network, serving destinations from major cities to regional communities. This extensive domestic footprint provides competitive advantages in:

• Feeding traffic to international flights

• Serving local communities with limited alternatives

• Maintaining high frequency on key business routes

• Offering connections that competitors cannot match

Brand Portfolio Strategy:

The multi-brand approach allows ANA to compete across different market segments:

• ANA brand serves premium and mid-market passengers with full-service offerings

• Peach Aviation captures price-sensitive leisure travelers with LCC fares

• AirJapan (active until early 2026) provided medium-haul international service

This segmentation strategy enables the group to maximize revenue capture while defending market share against both full-service and low-cost competitors.

Low-Cost Carrier Strategy: Peach Aviation

Peach Aviation represents ANA’s commitment to the growing low-cost carrier segment in Japan and Asia. As Japan’s leading LCC, Peach operates from its Osaka Kansai hub, serving domestic and regional international routes with a focus on leisure travelers.

Peach Performance and Operations

During the first half of fiscal 2025, Peach generated revenues of 65.6 billion yen, though this represented a decline of 7.9 percent year-on-year. The decrease resulted primarily from intensifying price competition on international routes with other carriers.

However, the airline maintained operational stability with 4,625,470 passengers carried, essentially flat compared to the prior year.

Route Network Development:

Peach continued expanding its network to capture leisure demand:

• Launched Osaka Kansai to Seoul Gimpo service in April 2025

• Started Nagoya Chubu to Seoul Gimpo operations

• Increased frequencies on Korean routes in August 2025

• Operated seasonal services to Memanbetsu and Kushiro from Osaka Kansai

Infrastructure Investment:

In July 2025, Peach opened a proprietary training facility within Kansai International Airport.

This facility aims to enhance flight safety, improve service quality, and develop human resources, addressing the industry-wide labor shortage challenges facing Japanese aviation.

AirJapan Consolidation Decision

In a strategic shift announced in October 2025, ANA Holdings decided to suspend AirJapan operations by March 2026, after just two years of service. The hybrid carrier, launched in 2024 to serve medium-haul international routes, achieved revenue growth and successfully captured inbound demand.

However, management determined that consolidating operations under the ANA and Peach brands would improve operational efficiency and resource allocation.

The decision reflects ANA’s commitment to optimizing its brand portfolio and focusing resources on the most profitable segments. Routes previously served by AirJapan will be reassigned to ANA or adjusted based on market conditions and profitability assessments.

Cargo Business Evolution and Strategy

The cargo segment represents an increasingly important component of ANA’s business portfolio, particularly following the NCA acquisition.

The company operates cargo services through multiple channels: dedicated freighter aircraft, belly capacity on passenger flights, and partnerships with other carriers.

International Cargo Performance

International cargo operations faced headwinds during the first half of fiscal 2025, primarily due to declining demand on China-to-North America routes resulting from US tariff policies.

Despite these challenges, the airline strengthened cargo capture between Asia and North America, achieving mixed results:

ANA Brand Cargo (First Half FY2025):

• International cargo revenue: 86.9 billion yen (down 2.4% YoY)

• Cargo volume: 363,520 tons (up 4.4% YoY)

• Available cargo capacity increased 3.4% YoY

• Load factor: 57.8% (up 0.8 percentage points)

The revenue decline despite volume growth reflected multiple factors including exchange rate effects, reduced automotive-related cargo demand, and pricing pressure in certain market segments.

However, the airline successfully captured high-value cargo including e-commerce shipments and temperature-sensitive pharmaceuticals.

NCA Contribution:

Following the August 2025 acquisition, NCA contributed significantly to the cargo segment despite operating for only two months within the reporting period.

NCA generated international cargo revenues of 63.4 billion yen, focusing on high-value cargo such as AI server components and specialized freight between Asia, Europe, and North America.

Domestic Cargo Operations

Domestic cargo services provide steady revenue streams and complement passenger operations:

• Domestic cargo revenue: 18.6 billion yen (up 0.8% YoY)

• Cargo volume: 131,345 tons (down 1.0% YoY)

• Integration with passenger flight schedules provides network flexibility

• Focus on time-sensitive and high-value domestic shipments

Strategic Cargo Initiatives

ANA implemented several initiatives to enhance cargo competitiveness:

Digital Platform Integration:

In April 2025, ANA became the first Japanese carrier to offer cargo space booking through CargoWise, a leading global air cargo booking platform.

This digital integration streamlines the booking process for freight forwarders and direct shippers, reducing transaction times and improving operational efficiency.

Network Optimization:

The combined ANA and NCA cargo network allows flexible deployment of freighter capacity based on demand patterns.

Management can optimize routes, adjust frequencies, and allocate capacity between dedicated freighters and passenger belly space to maximize profitability and service levels.

Infrastructure Enhancement:

ANA consolidated freighter operations at Tokyo Narita, improving operational efficiency and reducing ground handling costs.

The centralization allows better cargo flow management and enhances connections between different cargo services.

Sustainability Initiatives and Environmental Strategy

Environmental sustainability represents a core strategic priority for ANA Holdings, reflecting both regulatory requirements and stakeholder expectations.

The company has established comprehensive environmental targets aligned with the aviation industry’s decarbonization goals.

Carbon Reduction Targets and Progress

ANA committed to achieving specific environmental goals aligned with international aviation standards:

Fiscal 2030 Targets:

• Reduce CO2 emissions on international and domestic flights by at least 10 percent compared to fiscal 2019 levels (net reduction)

• Replace at least 10 percent of total jet fuel consumption with sustainable aviation fuel (SAF)

• Reduce CO2 emissions from non-aircraft operations by at least 33 percent compared to fiscal 2019

Fiscal 2050 Long-term Goal:

• Achieve net-zero carbon emissions across all operations

• Transition almost all fuel consumption to low-carbon or zero-carbon alternatives

The company’s environmental strategy encompasses multiple approaches including operational improvements, sustainable aviation fuel adoption, emissions trading, and investments in negative emissions technologies.

Sustainable Aviation Fuel Initiatives

SAF represents the most promising near-term technology for reducing aviation emissions. ANA has actively pursued SAF adoption through multiple channels:

SAF Flight Initiative Program:

ANA launched the SAF Flight Initiative, a dedicated program to reduce CO2 emissions by promoting sustainable aviation fuel use. The program offers customers the opportunity to offset emissions from their flights through SAF purchases, creating a mechanism for corporate and individual travelers to support decarbonization efforts.

SAF can reduce CO2 emissions by up to 80 percent compared to conventional jet fuel throughout its lifecycle, from production through combustion. ANA procures SAF blended in Japan and from international suppliers, gradually scaling adoption toward the 10 percent target by fiscal 2030.

Partnership Strategy:

The airline established partnerships with SAF producers including Raven SR, which plans commercial SAF production starting in 2025 in California using non-combustible conversion technology. These partnerships secure long-term SAF supply while supporting the development of sustainable production infrastructure.

Japanese regulations require airlines to reduce or offset 15 percent of emissions from 2019 levels starting in 2024, creating regulatory drivers for SAF adoption and other carbon reduction measures.

Operational Efficiency Improvements

Beyond SAF, ANA pursues multiple operational initiatives to reduce fuel consumption and emissions:

Flight Operations Optimization:

• Advanced flight planning systems to optimize routes and altitudes

• Single-engine taxi procedures to reduce ground fuel consumption

• Continuous descent approaches to minimize fuel use during landing

• Weight reduction initiatives including lighter cabin equipment and materials

Fleet Modernization:

• Transition to more fuel-efficient aircraft like the Boeing 787 and Airbus A321neo

• Retirement of older, less efficient aircraft types

• Winglet installations and aerodynamic improvements on existing aircraft

Ground Operations:

• Transition to electric ground support equipment at airports

• Energy-efficient terminal buildings and facilities

• LED lighting installations and HVAC system improvements

Environmental Recognition

ANA Holdings’ sustainability efforts have earned external recognition. In February 2025, the company achieved a third consecutive ranking on the CDP Climate Change A List, demonstrating ongoing commitment to climate action and transparency in environmental reporting.

Technology and Digital Transformation

Digital technology plays an increasingly important role in ANA’s operations and customer experience strategy. The airline invests in multiple technology initiatives to improve efficiency, enhance safety, and differentiate its service offerings.

Operational Technology Innovations

AI-Based Turbulence Prediction:

In 2025, ANA implemented an AI-based turbulence prediction service developed by BlueWX Company.

This technology enhances passenger comfort by providing flight crews with more accurate turbulence forecasts, allowing them to adjust flight paths and altitudes proactively. The system improves safety while reducing instances of discomfort from unexpected turbulence.

Flight Schedule Optimization:

Starting in July 2025, ANA introduced a system that automatically formulates revised flight schedules faster and more optimally following disruptions caused by adverse weather.

The technology reduces the time required to determine revised schedules, minimizing impacts on customers during irregular operations and improving overall operational resilience.

Customer-Facing Digital Enhancements

In-Flight Connectivity:

ANA began offering free high-speed in-flight internet service on some aircraft for all classes starting in August 2025, enabling video streaming and other bandwidth-intensive applications.

The airline plans to expand the number of eligible aircraft equipped with this service, enhancing customer comfort and productivity during flights.

The service differentiates ANA from competitors and addresses business travelers’ needs for connectivity. By offering complimentary high-speed internet across all cabin classes, ANA positions itself as a technology leader in the Japanese market.

Digital Platform Partnerships:

In August 2025, FPT Software and ANA Systems forged a strategic partnership to advance digital innovation in aviation.

The collaboration aims to drive innovation, enhance operational stability, and strengthen digital infrastructure within the aviation sector, establishing a joint operational framework to improve IT infrastructure for the ANA Group.

Digital Recognition and Leadership

ANA’s digital transformation efforts earned recognition in industry assessments.

The airline was included in the FTE Airline Digital Transformation Power List Asia-Pacific 2025, acknowledging its commitment to innovation and reimagining the travel experience through technological advancement.

Market Demand Dynamics and Travel Trends

Understanding the demand environment is essential for assessing ANA’s growth prospects. The Japanese aviation market exhibits distinct characteristics driven by demographic trends, economic conditions, and tourism patterns.

Inbound Tourism Boom

Japan experienced unprecedented inbound tourism growth through 2025, creating substantial opportunities for airlines serving the market.

Inbound tourist numbers increased by 21.5 percent year-on-year in May 2025 and 28.5 percent in April 2025, exceeding 2019 pre-pandemic levels by more than 30 percent.

Drivers of Inbound Demand:

• Weak Japanese yen making Japan more affordable for foreign travelers

• Pent-up demand from pandemic travel restrictions

• Government tourism promotion initiatives

• Cultural attractions and unique experiences drawing visitors

• Major events including the Osaka-Kansai Expo

The strong inbound demand particularly benefits ANA’s international passenger services, with the airline reporting that international passenger revenue reached record highs during the first quarter of fiscal 2025.

The carrier actively captured this demand through capacity additions, route expansion, and marketing campaigns targeting key source markets.

Outbound Travel Recovery Challenges

While inbound tourism flourishes, Japanese outbound travel recovery lags pre-pandemic levels. Japan’s overall outbound travel remained approximately 30 percent below pre-pandemic levels as of late 2024, though gradual improvement continues.

Factors Constraining Outbound Growth:

• Weak yen reducing purchasing power for Japanese travelers abroad

• Economic uncertainty affecting discretionary travel spending

• Demographic trends with aging population less likely to travel internationally

• Shift in preferences toward domestic tourism among some segments

Despite these headwinds, wealthy Japanese travelers continue to undertake long-haul trips to Europe and North America, supporting premium cabin demand. ANA targets this segment through service enhancements, loyalty programs, and partnerships that provide value for outbound travelers.

Domestic Market Stability

The domestic market provides stable demand foundation for ANA’s operations:

Domestic Demand Characteristics:

• Business travel recovering to near pre-pandemic levels on key routes

• Leisure demand strong during peak seasons and holidays

• Regional connectivity essential for communities with limited transportation alternatives

• Price sensitivity varying significantly across route and passenger types

During the first half of fiscal 2025, ANA’s domestic passenger numbers increased 4.1 percent despite industry observers describing the domestic market as “challenging” due to intensifying competition and some capacity oversupply on certain routes.

Industry Challenges and Risk Factors

While ANA demonstrates strong performance and strategic positioning, the company faces multiple challenges common to the aviation industry and specific to the Japanese market.

Labor Shortage and Human Capital Constraints

Japan’s aviation sector confronts a severe labor shortage affecting multiple workforce categories:

Pilot Shortage:

The industry faces difficulties recruiting and retaining pilots, with many pilots hired during expansion years approaching mandatory retirement age. Training capacity limitations constrain the ability to quickly expand the pilot workforce, potentially limiting growth opportunities.

To address pilot shortages, ANA and other carriers have increased pilot compensation, improved work scheduling rules, and enhanced training programs. However, the fundamental supply-demand imbalance persists, requiring continued focus on recruitment and retention.

Maintenance Technician Shortage:

An aging workforce of aircraft maintenance technicians creates concerns about maintaining high safety and reliability standards. Foreign aircraft engineers are increasingly joining Japanese carriers to help address the shortage, though language and certification differences create integration challenges.

Ground Service Staff:

Airport ground handling, customer service, and other operational roles also face staffing constraints. The tight labor market in Japan makes recruiting and retaining employees increasingly expensive, contributing to rising operating costs.

ANA has responded through increased personnel expenses and human resources investments, contributing to the operating income decline in the first half of fiscal 2025 despite revenue growth. The company recognizes that addressing labor shortages requires sustained investment in competitive compensation, training, and workplace culture.

Geopolitical and Economic Uncertainties

The global geopolitical environment creates multiple risk factors for international aviation operations:

Regional Tensions:

Ongoing situations in Ukraine, the Middle East, and potential tensions in East Asia affect routing options, fuel costs, and traveler confidence. Route diversions and airspace restrictions can increase operating costs and reduce efficiency on affected routes.

US Trade Policy:

Tariff policies and trade tensions, particularly between the United States and China, impact cargo demand and freight routing patterns. ANA experienced this directly through declining cargo demand on China-to-North America routes due to US tariff measures.

Currency Volatility:

As an international airline, ANA faces currency exposure from multiple sources including fuel costs (typically denominated in US dollars), aircraft lease and purchase commitments, and revenue from international operations. Yen weakness benefits inbound tourism but increases costs for fuel and aircraft.

Aircraft Supply Chain Disruptions

The aviation industry continues experiencing aircraft delivery delays driven by skilled labor shortages at manufacturers, engine reliability issues, and maintenance backlogs. Airlines face a 21 percent shortfall in scheduled aircraft deliveries for 2025-2026, constraining capacity growth and fleet modernization plans.

For ANA, these delays could impact the planned fleet expansion and route development, though the large existing fleet provides some flexibility to optimize deployment of current assets while awaiting new deliveries.

Fuel Cost Volatility

Jet fuel represents the single largest variable cost for airlines, and fuel price volatility creates earnings uncertainty.

While ANA benefits from fuel hedging strategies and SAF initiatives, the company remains exposed to oil market fluctuations. The fiscal 2025 forecast assumes Dubai crude oil at $75 per barrel and Singapore kerosene at $90 per barrel; significant deviations from these assumptions would impact profitability.

Environmental Regulations and Compliance Costs

Increasingly stringent environmental regulations require substantial investments in SAF, carbon offset programs, and operational modifications.

Japanese regulations mandating 15 percent emissions reductions from 2019 levels create compliance obligations, while the global push toward net-zero aviation by 2050 requires long-term capital investments in new technologies and infrastructure.

The costs associated with environmental compliance may disadvantage airlines relative to other transportation modes or international competitors in regions with less stringent regulations, though ANA’s proactive approach to sustainability may create competitive advantages through brand differentiation.

Outlook for 2026 and Strategic Priorities

Financial Projections and Growth Trajectory

ANA Holdings’ revised fiscal 2025 forecast projects operating revenue of 2,480.0 billion yen and net income of 145.0 billion yen. These figures suggest the company is on track to exceed fiscal 2024 performance and continue the recovery trajectory established in recent years.

For fiscal 2026 and beyond, several factors support continued growth:

Revenue Growth Drivers:

• Sustained strong inbound tourism to Japan

• International route network expansion capturing new market opportunities

• Cargo revenue enhancement through NCA integration and network optimization

• Domestic market stability providing baseline revenue

• Premium cabin demand recovery among business travelers

Profitability Enhancement Initiatives:

• Operational efficiency improvements from fleet modernization

• Scale economies from larger network and aircraft fleet

• Technology investments reducing costs and improving productivity

• Cargo synergies generating incremental margins

• Brand portfolio optimization following AirJapan consolidation

ANA will likely continue reporting profitable operations through 2026, though growth rates may moderate as the post-pandemic recovery effect diminishes and the company faces tougher year-over-year comparisons.

Strategic Priorities Through 2026

Network Expansion and Connectivity:

ANA plans continued international growth, with new routes to Brussels, Perth, and Mumbai launching in 2026. The carrier aims to reach 8 percent more international capacity in fiscal 2025 compared to fiscal 2024, positioning for sustained international growth as demand permits.

Domestic network optimization continues, focusing on high-frequency services on key business routes while right-sizing capacity on leisure-oriented routes based on seasonal demand patterns.

Fleet Modernization Acceleration:

The massive 77-aircraft order announced in February 2025 represents a multi-year fleet transformation. Deliveries beginning in 2025 and ramping up through 2028 will replace older aircraft with fuel-efficient models, reducing operating costs and environmental impact while improving passenger experience.

The Boeing 787 fleet expansion continues toward the target of 100 aircraft by fiscal 2030, cementing ANA’s position as the world’s leading 787 operator and providing operational flexibility across domestic and international networks.

Cargo Business Integration:

Completing the NCA integration and realizing synergies represents a key priority for 2026. Management expects cargo operations to contribute meaningfully to profit growth as route optimization progresses and market conditions improve.

The codeshare launched in October 2025 provides the foundation for deeper integration of operations, sales, and customer service functions.

Sustainability Leadership:

Achieving the fiscal 2030 environmental targets requires sustained focus on SAF procurement, operational efficiency improvements, and technology investments. ANA aims to position itself as a sustainability leader in Asian aviation, differentiating its brand and meeting stakeholder expectations around climate action.

Digital Transformation Continuation:

Expanding high-speed in-flight internet to more aircraft, implementing additional AI-based operational tools, and enhancing digital customer interfaces will improve competitive positioning.

Partnerships like the FPT Software collaboration provide expertise and resources to accelerate digital capabilities.

Human Capital Development:

Addressing labor shortages through enhanced recruitment, competitive compensation, comprehensive training programs, and retention initiatives remains essential for supporting growth plans. Investments in human capital generate returns through improved service quality, operational reliability, and organizational capability.

Multi-Brand Strategy Evolution

Following the decision to suspend AirJapan operations, ANA Holdings will focus its multi-brand strategy on two primary operating brands: the ANA flagship full-service carrier and Peach low-cost carrier. This streamlined approach offers several advantages:

Resource Efficiency:

Eliminating the AirJapan brand reduces complexity and allows concentration of management attention and capital on the two core brands. Resources previously allocated to AirJapan can be redirected to ANA and Peach operations where they generate higher returns.

Market Segmentation:

The ANA and Peach brands effectively serve different market segments. ANA captures premium and mid-market passengers seeking full service and network breadth, while Peach addresses price-sensitive leisure travelers who prioritize low fares over amenities.

This clear segmentation reduces brand confusion and allows targeted marketing.

Operational Simplicity:

Operating two distinct brands rather than three simplifies fleet planning, crew scheduling, network coordination, and system integration.

Management can optimize operations for each brand without the added complexity of coordinating a third carrier with overlapping market positioning.

For Peach specifically, the strategy involves international route expansion while maintaining domestic operations.

The airline aims to capture growing leisure demand in regional Asian markets, particularly to and from Osaka Kansai, while defending its position as Japan’s leading LCC against domestic and foreign competitors.

My Final Thoughts

All Nippon Airways’ strong first-half fiscal 2025 performance demonstrates effective execution of its strategic initiatives, while the upward revision of full-year forecasts reflects confidence in continued momentum.

Several fundamental strengths underpin ANA’s competitive position.

• The company operates Japan’s most extensive domestic network while maintaining the largest international presence among Japanese carriers.

• The world’s largest Boeing 787 fleet provides operational flexibility and cost efficiency.

• Premium service quality, recognized through APEX World Class and other awards, differentiates the brand in an intensely competitive market.

• The strategic acquisition of Nippon Cargo Airlines transforms ANA into a comprehensive combination carrier with enhanced cargo capabilities.

• A clear multi-brand strategy with ANA and Peach allows effective market segmentation and revenue optimization.

The challenges ahead require sustained management attention and strategic investments.

• Labor shortages affecting pilots, technicians, and ground staff create cost pressures and potential capacity constraints.

• Geopolitical uncertainties and economic volatility affect demand patterns and operating costs.

• Aircraft supply chain disruptions constrain growth plans and fleet modernization timelines.

• Rising environmental compliance costs require investments in SAF and operational modifications.

• Intense competition from both full-service and low-cost carriers pressures yields and market share.

As ANA moves into 2026 and beyond, the company’s strategic priorities center on international network expansion to capture growing inbound tourism and business travel demand, cargo business integration to realize NCA acquisition synergies, fleet modernization through the 77-aircraft order delivery, sustainability initiatives advancing toward fiscal 2030 environmental targets, and digital transformation enhancing operational efficiency and customer experience.

The Japanese aviation market offers substantial opportunities driven by inbound tourism strength, economic recovery, and Japan’s role as a major Asian hub.

ANA’s market leadership position, operational capabilities, and strategic investments position the carrier to capitalize on these opportunities while navigating industry challenges.

All Nippon Airways has demonstrated resilience and adaptability throughout its 70-plus year history. The current strategic direction, focused on profitable growth, operational excellence, and sustainability leadership, provides a framework for continued success in the dynamic global aviation industry.

While near-term volatility and periodic setbacks are inevitable in this capital-intensive and cyclical sector, ANA’s fundamental strengths and strategic positioning support optimism about the company’s trajectory through 2026 and beyond.