Peach to launch Japan's LCC sector with two-tier fare structure and basic ancillary options

2012 will see the rapid entrance of the low-cost model in Japan, a market whose high focus on service had been used as an excuse for why a la carte LCCs could not gain a standing in the country. The country's first LCC to come to market, Peach Aviation, has released its launch fare structure that offer discounts upwards of 58%. Despite fares significantly lower from full-service competitors, its ancillary options are so far basic, leaving room for improvement from established LCC brands AirAsia and Jetstar, who will enter the market in 2012 with their AirAsia Japan and Jetstar Japan subsidiaries.

While Peach's offerings may be underwhelming for those versed in LCC commercial strategy, they will still come as a shock to the Japanese, who have broadly not experienced a home-grown LCC. While Peach will have the first mover advantage in the market, it will also be the first to help the market adjust to LCC pricing strategies, which AirAsia and Jetstar will build on. Peach too can also be expected to expand its offering.