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Wednesday, April 18, 2012
Make way for low-cost carriers
Low-cost carriers will likely occupy a prominent place in Japan's aviation industry from now on as major airlines enter the LCC market. Peach Aviation, in which All Nippon Airways has invested, started domestic flights in March and will begin international flights in May to and from Kansai airport. Jetstar Japan, which is affiliated with Japan Airlines, will launch domestic flights in July and international flights next year using Narita airport as its base. AirAsia Japan, linked to ANA, will start domestic flights in August and international flights in October, and will also be based in Narita.
There are nearly 100 airports in Japan, but many of them are suffering from a low utilization rates. The government hopes to introduce the private sector's capital and management knowhow to revitalize these airports. It also should consider inviting LCCs to utilize these airports. Local governments and businesses near airports should make greater efforts to attract tourists.
To make their air fares cheaper — about half that of major airlines — LCCs feature more seats on their planes than full-service airlines and have minimalist in-flight services. LCC users should be aware of the chance of possible instability in LCC flight operations due to their use of a relatively small number of airliners. For their part, LCCs must do their utmost to ensure flight safety.
In Europe and North America, LCCs enjoy a market share of about 30 percent. They attract young people who can't afford high ticket prices as well as members of the rising middle class from the emerging Asian economies.
Peach Aviation on April 3 announced that about 67,000 people used its flights in March, with the load factor reaching 83 percent — more than the 75 to 80 percent it had expected. To better compete with LCCs, Skymark Airlines, known for its relatively cheap air fares, has said it will lower its air fares. Narita International Airport Co. on April 5 announced that it will build a terminal with slots for 10 LCC airliners by the end of fiscal 2014.
With the entry of LCCs, the face of Japan's aviation industry could change greatly. A survey by JTB Corp. shows that about 40 percent of participants expressed a desire to use LCC flights. With careful planning, the expansion of LCC flights could play an important role in the revitalization of local economies.