All Nippon Airways (ANA) president Shinichiro Ito said the carrier is targeting annual sales of between JPY150 billion and JPY200 billion (USD1.8 billion and USD2.5 billion) in five years from its LCC subsidiaries launching in 2012, acccording the The Nikkei reports. AirAsia Japan "will add five or six planes to its fleet each year, bringing the total to 25-30 aircraft in fiscal 2016," Mr Ito noted, adding that while the LCCs will "take away some of ANA's customers, they will contribute to group earnings". Peach Aviation, meanwhile, launched operations on 01-Mar-2012. [more - CAPA Blog]
ANA expects LCC subsidiaries to achieve annual sales of USD1.8bn to USD2.5b in five years
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Low-cost airline Peach boldly pursues Japan-Southeast Asia one-stop market using new Okinawa base
Japan’s Peach Aviation is looking at several potential markets in Southeast Asia as part of a new base in the southern Japanese island of Okinawa. The low-cost carrier is bullish on the Okinawa market, which it already serves from its Osaka Kansai base.
Peach is planning domestic expansion at Naha on Okinawa, starting with service to Shin Ishigaki in Sep-2013. It aims to start international operations at Naha as soon as the airport’s low-cost terminal, which opened specifically for Peach in Oct-2012, is upgraded to handle international flights.
Peach expects the Okinawa base will attract a high volume of transit passengers heading from its various destinations in Japan to Southeast Asia. But at least for now Peach plans to rely on self-connections rather than offer a connecting product. Peach already sees a large number of self-connections coming from its international destinations, particularly Hong Kong.
LCCs in Japan welcomed with open arms, despite the many arguments against
For years it was said that Japan, despite high air fares and inefficient incumbent airlines, would never be a breeding ground for low-cost carriers. Excuses were many – airport taxes were too high, there were no low-cost terminals – but the last resort claim for why LCCs would not work in Japan was that the Japanese people, used to pampering in their service-oriented society, would never accept the core principles of LCCs.
With breathtaking speed the Japanese government and companies broke down barriers to support LCCs, three of which launched in 2012. They could do everything but change public attitude about LCCs. Yet it turned out the Japanese public did not need the open-heart surgery many thought would be required. Japan's air market has been devolving on service, closing the gap between full-service incumbents and LCC start-ups. The LCCs are also not the bare-bones, service-adverse airlines many stereotyped.
This poses a challenge to how full-service carriers can maintain a yield premium, which received a bleak reminder with Skymark pulling off routes in response to LCCs entering. The Japanese experience also offers a lesson to other markets, like South Korea, Taiwan and Hong Kong, where some claim the population will not ever accept the concept of a LCC.