Japan's MLIT stated (09-Sep-2011) it would commence aviation talks for an open skies agreement with Canada in Vancouver on 13/14-Sep-2011. With the exception of the US, this will be the first open skies negotiations with a country outside east Asia and the ASEAN group, with which MLIT has almost completed conclusion for agreements.
Japan to commence open skies talks with Canada
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Jin Air aims to balance relationship with owner Korean Air as outbound market prepares for growth
As CAPA's LCCs and New Age Airlines Sep-2013 conference in Seoul clearly identified, the wheels are starting to turn in Korea, the home of the first LCCs in North Asia. But more recently it has suffered from stagnation as carriers do not offer a cost base that is competitive with other LCC developments in the region. Jin Air is the country's second largest LCC and wholly-owned by Korean Air. This brings advantages but also disadvantages, as CEO Won Ma said at the CAPA conference. Mr Ma sees that Jin Air needs to improve its cost base and has started to charge for small ancillaries, but not luggage. Jin Air also incurs higher costs from using some Korean Air services.
2012 was Jin Air's third year of profits, which were very respectable given the industry but lagging considering Jin Air's modest network, with limited competition. But the Jin Air-Korean Air relationship is far ahead of Asiana and its partially-owned LCC unit Air Busan, struggling to remain relevant up against Jin Air and the the even larger Jeju Air, Korea's largest independent LCC. If Jin Air, like other LCCs, can make very necessary cost structure reforms, there are increasing opportunities as the Korean outbound market grows, thanks to the strengthening of the won. It is time now more than ever to apply more pressure on the accelerator.
Japan's StarFlyer, struggling to expand its niche, will reduce its fleet and receive new management
One of Japan's smaller carriers, StarFlyer is finding that being boutique does not imply versatility. The carrier in just a year has swung from slight profits to a negative 10% operating margin, spearheading the resignation of its president and cutting the all-A320 fleet from 11 to nine. Weighing the carrier down, besides foreign exchange, was a drastically unsuccessful foray into the international market with a Kitakyushu-Busan service that linked two secondary cities with limited demand and too high a cost base to stimulate demand.
StarFlyer has strengths. It retains the fourth-largest slot pool at Tokyo Haneda and sees healthy codeshare bookings from All Nippon Airways, which also owns part of the carrier, a measure likely to support ANA's position relative to rival Japan Airlines. It is possible to address past performance, and a restructuring plan intends to do so. But the future will pose further challenges. Shorter routes are being impacted by LCCs, and StarFlyer has ended Fukuoka-Osaka Kansai services. Skymark's forthcoming all-premium A330 service will deliver better comfort at lower prices, which it can sustain with a cost base half that of StarFlyer and ANA. That low cost base is the critical ingredient giving Skymark expansion opportunities. The restricted nature of Haneda grants security and, likely, a future for StarFlyer. But expansion opportunities also look restricted, possibly confining StarFlyer to its niche and ultimately see the carrier lose relevance.