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ANA LCC to have initial investment of USD179m

13-Sep-2010 9:58 AM

First Eastern Investment reportedly invested HKD461 million (USD59 million) for a 33% stake in a JV Japanese LCC, in which ANA will hold 39% (The Standard, 13-Sep-2010). First Eastern Chairman and CEO, Victor Chu, stated the Kansai-based LCC will offer between five and 10 domestic routes in its first year of operations (reportedly including Narita, Fukuoka and Naha), with the routes to be short-haul sectors of less than four hours with ticket prices 50% less than present market levels. Mr Chu added that the carrier is also seeking to attract international passengers, especially from China. "The Chinese will be a driving force [in both Japan and the region] as their travels abroad become more frequent," he said. He said the number of Chinese visitors to Japan has surged more than fourfold in two years, adding that there could could be up to 4 million Chinese visitors p/a after visa requirements are eased. Mr Chu added that the carrier would lease a number of aircraft and while not disclosing a proposed break-even timeline, he stated the size of the initial investment of JPY15 billion (USD179 million) "is definitely enough" for five years of developing the Japan domestic market (Financial Times, 11-Sep-2010). Meanwhile, ANA President, Shinichiro Ito, conceded that it "can't rule out the possibility that the low-cost carrier will eat into ANA's profits" (Yomiuri Shimbun, 11-Sep-2010).