All Nippon Airways warned (03-Aug-2012) it is "facing a number of headwinds in the shape of a slowing world economy, the growing government debt crisis in Europe and increased competition". Increased competition has been witnessed through the liberalisation of Japanese aviation, slot expansion at Tokyo area airports and "the start of full-scale operations by low-cost carriers in Japan" means rising competition in the aviation industry. The carrier also forecast a gradual continued recovery for the Japanese economy backed by reconstruction demand from the earthquake in Japan in Mar-2011, despite rising oil prices, exchange rate fluctuation and restrictions on the supply of electric power. The global economy, however, is expected to slow as the government debt crisis in Europe worsens. [more - original PR]
ANA notes impact of global economic conditions, LCC entry in Japan
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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.
US-Japan airline alliances become lopsided as JAL, ANA expand while US to shift to other markets
The anti-trust immunity alliances between All Nippon Airways and United Airlines as well as Japan Airlines and American Airlines are past the honeymoon phase. Whereas the airlines a decade ago were bullish on linking the mighty US with Japan Inc., today the latter's economy is still underperforming.
Japanese airlines are now ramping up US capacity to existing and new destinations as they seek to woo markets with their premium products, efficient hubs and services to secondary US cities, reducing connections.
But US carriers are expanding less than their Japanese partners, which impacts the competitive potential of the JVs, as Japanese carriers have far higher CASKs. The US airlines are also looking to diversify what United calls its "non-Japan Asia" network, a reflection of the growing importance of China. United will resume services to Taipei while American will expand to Seoul, but the pot of gold is mainland China.
Expansion there will be steady as slots are difficult to secure and airlines are dependent on next-generation aircraft to make secondary cities profitable. China services would likely be excluded from the JVs with Japanese carriers due to the Chinese regulatory environment – possibly spearheading the formation of new JVs. But that will depend on the pace of liberalisation.