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ANA LCC to be operationally independent; expects 'some erosion' of market share

31-Dec-2010 9:29 AM

All Nippon Airways (ANA) President Shinichiro Ito stated the carrier's new LCC will be operationally independent and have its own business model to be profitable (The Nikkei, 30-Dec-2010). He added that ANA plans to "make sure" the LCC is able to manage its operation "totally independently" from ANA to provide "the minimum support needed" for the carrier's start-up. ANA will then "distance itself after a while". Mr Ito added that all systems and programmes will be separate from ANA, with the carrier to hire its own pilots and cabin attendants. Mr Ito conceded that AirAsia X, which recently commenced service to Tokyo Haneda, will "pose a serious threat" to the LCC. He also added that ANA expects "some erosion" of its market share from the new LCC subsidiary.

ANA: "I feel as if a Pandora's box has been opened. The carrier [AirAsia X] will pose a serious threat to us if it starts operating a large number of flights to and from Japan using Kansai International Airport, as a hub, for instance. In Europe, Irish low-cost carrier Ryanair has come to dominate the region's market for international air service, forcing major European airlines into alliances for survival. In the US, Southwest Airlines, also a discount player, controls a large share of the domestic market. That could happen in Japan as well. We are being proactive by setting up our own low-cost carrier," Shinichiro Ito, President. Source: The Nikkei, 30-Dec-2010.

ANA: "We are bracing for some erosion of ANA's market share. But the point is whether our new low-cost business can create new demand. We will gain more from such new demand than any losses we may suffer from the venture. We are aiming to launch the discount service as soon as possible, preferably in 2011," Shinichiro Ito, President. Source: The Nikkei, 30-Dec-2010.

ANA:"When Japan Airlines comes out of bankruptcy next spring it will re-emerge as a competitive airline. Skymark Airlines has been developing a business model not very different from that of a low-cost carrier. Next year ANA should make a sweeping review of its strategy and operations to improve its competitiveness against these rivals. We must bolster the efficiency and effectiveness of our systems and improve our productivity. We will tackle these challenges with company-wide efforts, driven by a shared sense of urgency," Shinichiro Ito, President. Source: The Nikkei, 30-Dec-2010.