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Saturday, Nov. 12, 2011

EDITORIAL

Age of low-cost flights

It appears that Japan is finally entering the age of low-cost flights. All Nippon Airways has set up a joint venture, Peach Aviation, with a Chinese investment fund and plans to set up another joint venture, AirAsia Japan, with AirAsia of Malaysia, a leading low-coast carrier (LCC) in Asia. Japan Airlines, now undergoing rehabilitation, has decided to launch an LCC joint venture, Jetstar Japan, with Australia's Qantas group and Mitsubishi Corp.

Peach Aviation will use Kansai airport as its base airport, starting flight operations in March 2012. AirAsia Japan will use Narita airport, starting flight services in August 2012. Jetstar Japan plans to start business in 2012.

At present, nine overseas LCCs are flying to and out of Japanese airports. Most of these airports are located outside the Tokyo metropolitan area and the LCCs' share in the market is only around 2 percent. The entry of ANA and JAL will help increase the weight of LCCs in Japan's aviation business.

Peach Aviation decided to use Kansai Airport as its base airport because it is close to other Asian countries, despite the high landing fee. AirAsia X, an affiliate of AirAsia, will start a service between Kuala Lumpur and Kansai on Nov. 30, 2011.

The big reason that ANA and JAL have become serious about the LCC business is that the number of landing and take-off slots at both Haneda and Narita airports is likely to increase. About a year ago, Haneda Airport started using four runways, leading to an increase in the number of flights to and from Asia, North America and Europe.

At Narita, the number of such slots is expected to rise to 300,000 a year in fiscal 2014 from the current 220,000. ANA and JAL apparently fear that unless they get into the LCC business, LCCs from other countries will take newly available slots at both airports.

LCCs can help increase the number of foreigners visiting Japan and can lower the cost of domestic travel, thus stimulating tourism and the whole economy. But to increase the share of LCCs in the Japanese market, Japan must solve structural problems such as high landing costs and the tax on jet fuel.

In Europe and North America, LCCs are said to enjoy a share of some 30 percent. Efforts also must be made to improve the management of airports in the countryside.



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