By Kaoru Sugano, Tsukasa Sano and Chie Ishii

Local governments and other entities are increasingly apprehensive about the effects of Japan Airlines' collapse, as the company plans to reduce or cease operations on a number of domestic routes and review its financial contribution to community events.

JAL plans to withdraw from Shizuoka Airport and cease operating a total of 12 flights by June.

The airline operator also said in its rehabilitation plan announced on Jun. 19, when it applied for court protection under the Corporate Rehabilitation Law, that it would end service on 17 domestic routes by fiscal 2012. However, it is yet to announce which flights it will cancel.

"If the flights are reduced or abolished, western Japan will undoubtedly seem farther away," said an executive of a precision machine parts manufacturer in Higashine, Yamagata Prefecture, where Yamagata Airport is located. "It'll inevitably affect our business."

The executive is concerned about the future of JAL flights to and from Osaka Airport, also known as Itami Airport, which his company uses for sales activities and the transportation of the firm's production prototypes.

People can easily go back and forth to Tokyo in one day if they use Shinkansen trains. However, the reduction or abolition of flights between Higashine and Osaka and Nagoya airports is expected to cause great inconvenience.

"Many companies have chosen our city [for their headquarters or branches] as we have an airport from which they can go to many places nationwide," said an official of the Higashine municipal government's commerce, industry and tourism section. "We absolutely need these flights."

In September, JAL told related local entities that it would reduce the rate of its financial contribution to Hokkaido Air System from 51 per cent to 15 per cent. In response, the Hokkaido prefectural government plans to ask local governments and companies in Hokkaido to make up for the reduced support.

However, local governments and companies are not affluent enough to afford such an investment as the economy remains sluggish. In light of this, an increasing number of local entities predict that the Hokkaido government will have to accept some HAC shares.

At Matsumoto Airport in Nagano Prefecture, from which JAL announced in November it would withdraw before it asked for court protection, Fuji Dream Airlines, an emerging airline based in Shizuoka Prefecture, will take over JAL's flights to Sapporo and Fukuoka in June.

To maintain the flight routes, the Nagano prefectural government will exempt the firm from annual landing fees of about 42 million yen (S$655,000) for a while and pay for the setting up of airport counters for the airline.

JAL currently operates three or four flights every week on each of those routes using turboprop planes.

"Daily jet service, which has been our long-cherished wish, will be realized," Nagano Gov. Jin Murai said.

However, some people are still apprehensive about the airport's future.

"If the number of passengers doesn't increase, it [Fuji Dream] will repeat JAL's failure," said a source in the prefecture's financial industry.

The effects of the failure of JAL, which sponsors local sports events and festivals, can be seen in nonbusiness areas.

JAL has provided financial cooperation to a ski competition held in Hakubamura, Nagano Prefecture, every April. In December, the airline told the meet's executive committee that it would review how to cooperate for the meet.

"We may have to cancel the lottery held along with the event or give up the lottery's main gift--air tickets," an executive committee member said.

Aomori Yamada Gakuen receives financial contributions from JAL for it participation in the Aomori Nebuta festival every August.

"It started to reduce financial contributions about four years ago," an Aomori Yamada Gakuen official said. "We may have to expect further cuts [due to JAL's collapse]."

The Akita prefectural government, which holds stock in JAL, is expected to suffer a loss.

In 1964, the prefectural government invested in North Japan Airlines, a predecessor of Japan Air System, which merged with JAL in 2002, and now holds 178,875 shares. The local government paid a total of about 9.9 million yen to obtain these stocks. JAL stocks will be worthless when the firm is delisted next Saturday.

However, the prefectural government said it had no plan to sell the stock, because it "bought them not for profit, but out of social obligation," a prefectural government said.