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Friday, June 1, 2012
AirAsia enters LCC fray via ¥5 flights
By AYAKO MIE
The surprise discount campaign announced by AirAsia Japan Co. on Wednesday has been an instant success and drawn much media coverage.
The budget airline said the 10,000 one-way tickets it started selling online from midnight priced at ¥5 for routes from Narita to Sapporo and from Fukuoka to Naha, Okinawa Prefecture, sold out within 10 hours.
At Wednesday's news conference, the airline also announced much lower minimum prices, ranging from ¥4,580 to ¥6,680 for flights from Narita to New Chitose Airport in Sapporo, Narita to Fukuoka and Narita to Naha. The prices are up to 50 percent cheaper than those offered by major airlines, a spokesman for AirAsia told The Japan Times on Thursday.
The aggressive promotional techniques of AirAsia, established in August and affiliated with All Nippon Airways Co., underline how competition among domestic low-cost carriers has intensified.
Following the carrier's discount campaign announcement, rival Jetstar immediately slashed its own ticket prices to undercut AirAsia's on the three routes. Jetstar is affiliated with Japan Airlines Corp.
AirAsia is the third LCC formed to tap Japan's largely underdeveloped budget airline sector, after Peach Aviation Co, another ANA unit based in the Kansai region, and Jetstar.
AirAsia President Kazuyuki Iwakata told the news conference that the carrier hopes to fly 1 million passengers in its first year, adding it also plans to launch low-cost international flights.
Peach Aviation was launched in February and started domestic flights the following month from Kansai International Airport to Fukuoka and Sapporo. It also launched international services to Seoul in May. Jetstar, meanwhile, is set to start domestic flights in July on the same routes as Peach Aviation and AirAsia.
"We think the tougher competition will help to expand the sector. The more people become familiar with low-cost carriers, the more they will use us," a Jetstar representative said.
Jeststar's minimum fares for flights departing from Narita will cost ¥4,490 to Sapporo, ¥5,090 to Fukuoka and ¥6,590 to Naha. If customers manage to find a lower price among its competitors, the carrier will offer a 10 percent discount on that fare. Peach also plans to cut the fare on its Kansai-Fukuoka flights so they are as cheap as Jetstar's.
However, analysts warn that cheap tickets mean the airlines may also offer only basic services. LCCs operate with fewer flight attendants and charge check-in fees on any baggage and seat assignments.
Their smaller fleets also make them more vulnerable to cancellations or delays due to technical problems, and they are not required to rebook passengers on other carriers or offer accommodations.