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LCCs in Japan (PART 1). AirAsiaX: Visa restrictions make the Japan market uncompetitive in 2009

24-Jul-2008
AirAsia X CEO, Azran Osman-Rani
AirAsia X CEO, Azran Osman-Rani
  • Visa factor rules out AirAsia X flying to Japan in 2009;
  • Japan “no more expensive” to operate to than Hong Kong;
  • Japan has “huge attractions” for foreign visitors;
  • Next AirAsia X destinations could be Korea, India, the Middle East, or Australia;
  • In tomorrow’s edition: PART 2: AirAsiaX: six Japanese airports put out the welcome mat – first movers to benefit.

AirAsiaX, Asia’s highest profile long-haul LCC, is unlikely to fly to Japan next year, despite several airports welcoming it. Japan’s highly restrictive visa system “almost rules out” starting service in 2009. The Kuala Lumpur based airline, which last year began a successful operation between Australia’s Gold Coast and Kuala Lumpur, linking into AirAsia’s extensive Asian network, is reviewing which destinations it will fly to later this year and in 2009.

AirAsiaX, Asia's highest profile long haul LCC, is unlikely to fly to Japan next year, despite several airports welcoming it. Japan's highly restrictive visa system "almost rules out" starting service in 2009.

The Kuala Lumpur based airline, which last year began a successful operation between Australia's Gold Coast and Kuala Lumpur, linking into AirAsia's extensive Asian network, is reviewing which destinations it will fly to later this year and in 2009.

But, despite several Japanese airports making attractive offers to it to commence service, Japan's restrictive visa system for Malaysian-origin passengers is hampering plans.

As the airline's CEO, Azran Osman-Rani, told the Centre's associate, Geoffrey Tudor, last week, "So far as flying to Japan is concerned we could fly in as early as spring 2009 because we would have the aircraft - but we are still thinking. Our next destinations could be in Japan or Korea, or India and the Middle East - or a third point in Australia after our second point Perth, where we start to fly on November 2 this year."

But, he stressed the problem with Japan's visa restrictions: "Frankly, on deciding to fly to Japan, what concerns me most of all is the visa restriction on Malaysian passengers. If a traveller makes a booking, can they be confident of getting a visa? Our basic ticket-selling policy is based on the Malaysian market....Look at the competition for the Malaysian tourist in other countries. Korea doesn't require visas from Malaysians. Australia has the ETA visa system, which is on-line and easy to use. Even China gives visas on arrival to Malaysians....To get a Japanese visa, a Malaysian has to visit the embassy in KL - at least twice - and there is no guarantee that a visa will be issued."

In that respect, Japan lags behind many other countries that are eagerly competing for foreign tourists.

"On the visa factor alone, I would almost rule out starting to fly here in 2009," Mr Osman-Rani observed.

However, one thing we have found is that the common perception that Japan is expensive is not borne out by the facts. It is no more expensive than Hong Kong and service standards are high.

Japan is no longer a high cost destination, at least relative to destinations like Hong Kong, and, says Mr Osman-Rani, "what makes Japan very attractive for Malaysians is the unique Japanese culture, both from historical and contemporary points of view. That includes the very many facets of its unique traditional culture, a fantastic cuisine, modern trends such as anime - and the fact that Tokyo is the fashion capital of Asia. All these are huge attractions."

"So it's a pity that the present visa system is a barrier." Until the visa regime changes, says Osman-Rani, "we're not rushing to get into Japan, because I want to do it on terms that make sense to us as a company and not for the sake of Japan. There is no strategic or compelling reason that AirAsia X must be in Japan in early 2009."

But he ended on a positive note. "So Japan is an option and within a five-year horizon, we definitely want to be here and we think we can serve at least two cities in Japan within that time period."

If Japan wants to be in the regional LCC market sooner than that, clearly the visa issue will need to be resolved.

In tomorrow's edition: PART 2: AirAsiaX: Six Japanese airports put out the welcome mat - first movers to benefit.


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