Air Do, product of Japan’s quixotic airline market, likely to remain independent pending reform

Air Do, based in the Hokkaido region in Japan, is an unusual type of carrier and perhaps one that could only exist in Japan's atypical domestic environment. It enjoys a strikingly synergistic relationship with All Nippon Airways and leverages a valuable position at slot-constrained Haneda.

Air Do has challenges: Its traffic is highly seasonal, relying on passengers to flee the scorching summer for Hokkaido's cooler weather. Air Do's fleet of 767s allows it to target Tokyo-Sapporo, the world's largest air route, while 737 classics serve thinner points in Hokkaido. But this brings considerable inefficiency to a 13-aircraft fleet, Air Do CEO Sadao Saito told CAPA's LCCs and New Age Airlines conference in Seoul. Air Do's CASK and yield are lower than at ANA, and Air Do creates efficiency with load factors typically 10ppts higher than at ANA or JAL on overlapping routes. Air Do generally posts profits but with large variance.