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Wednesday, Aug. 17, 2011

JAL joins partners in low-cost carrier bid


Staff writer

Japan Airlines Corp., Mitsubishi Corp. and Australia's Qantas Group announced Tuesday they will jointly launch a low-cost carrier in Japan, aiming to boost their competitiveness in the market here amid an influx of budget carriers.

Jetstar Japan Co. plans to start domestic service by the end of 2012, flying from Narita International Airport and Osaka's Kansai International Airport, but it isn't known yet which hub will serve as its base.

Prospective destinations include Sapporo, Fukuoka and Okinawa, the three companies said.

Jetstar Japan may also launch short-haul international flights to major cities in Asia, they said.

It will use the business model of Jetstar, Qantas Group's budget brand, offering the cheapest fares among airlines on the same routes, or some 40 percent lower than existing prices by major carriers, they said.

The airline will start out with three Airbus A320s and later increase its fleet to 24, they said, adding the new company will be established in September with initial capital of ¥4.8 billion. Each partner will own one-third of the new airline on a voting rights basis.

Considering the expected expansion of landing slots at Narita and Haneda airports, "we thought this is a great chance to diversify and expand our business," JAL President Masaru Onishi told reporters in Tokyo.

All Nippon Airways Co., JAL's rival, announced last month the establishment of the low-cost carrier AirAsia Japan, together with Malaysia's AirAsia Bhd.

It plans to launch domestic and international operations next August. ANA has also invested in Peach Aviation, a new Japanese budget airline that plans to serve domestic routes starting next March and international routes starting in May.

Asked if JAL will manage to catch up with ANA, Onishi said he doesn't feel his airline is late in joining Japan's budget airline market.

"We are here right now after over a year of discussion with Jetstar," Onishi said.



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