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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Air Canada’s improved positive 1Q2014 outlook is encouraging as it works towards long-term stability
Canada’s largest airline Air Canada has revised its outlook for 1Q2014 to a slightly more favourable performance after its cost and revenue metrics beat initial expectations.
Air Canada’s encouraging revisions to its 1Q2014 projections are against a backdrop of a falling CAD against the USD, which is creating mixed results for the carrier. The outlook of Air Canada’s rival WestJet is markedly different – it expects costs to rise and unit revenues to remain flat or increase slightly during 1Q2014 as it believes currency fluctuations will dampen its results.
The operation of higher density aircraft, protections in place to combat the swings in Canada’s currency and tempered capacity growth helped Air Canada change its outlook for 1Q2014, but the carrier is still expected to report a quarterly loss. After the initial excitement of better-than-expected cost and revenue performance wears off, the loss is what will linger in investors’ minds.
Japan's expanding LCCs drive growth but need cultivating; Spring Airlines and AirAsia re-entry loom
The new wave of low-cost carriers in Japan are entering their third year of operations, with Peach Aviation passing the milestone in Mar-2014 and Jetstar Japan doing so in Jul-2014. Along with AirAsia Japan (launched in Aug-2012 and re-launched in Dec-2013 as Vanilla Air) and a number of preceding LCCs, they are not only delivering on Japan's objective to raise passenger figures but are seeing LCCs become a serious force in Japan. In the last nine months of 2013 LCCs carried 17% of passengers in Japan's domestic market while for the first three months of 2014 they offer 24% – nearly one quarter – of available seat capacity, according to OAG.
The three new LCCs – Peach, Jetstar and Vanilla – carried 6% of traffic. While depressed from the AirAsia/Vanilla switch, it marks a start for the first carriers to eliminate all frills, unlike predecessors such as Skymark, which alone carried 7% of traffic. The adoption to LCCs in Japan is slow, and there were some early painful lessons, but growth is near-guaranteed. Jetstar Japan added nearly as many seats as JAL while Peach added nearly as many seats as ANA. Meanwhile ANA and JAL project long-term decreases in Japan's domestic market. Further, Jun-2014 sees the launch of Spring Airlines Japan with domestic flights and in the future international services, mainly to China. This is the first (but will not be the last) international JV for China's Spring Airlines. AirAsia is also looking to re-enter. However, five new LCCs plus three existing mean excessive market fragmentation.
Although it may challenge the epithet that airlines never die in Japan, consolidation is in order. But more importantly, until prevailing legacy attitudes are redirected towards supporting economic expansion goals, LCCs will continue to labour under unnecessary handicaps.