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As an archipelago, flying is an efficient way to travel from the main islands to the many small islands around Japan. Hence Tokyo-Sapporo is one of the world's busiest routes. Aviation within Japan is comprised of two large groups, the JAL Group and ANA Group, each operating an extensive network. There is a range of smaller airlines which mainly compete on the busiest business routes, however more recent entrants such as fast growing Skymark Airlines (LCC) offer extensive networks. The JAL Group consists of JAL Domestic and JAL International, several smaller airlines such as Japan Transocean Air and Ryukyu Air Commuter. The ANA Group consists of All Nippon Airways and Air Nippon.
In 2012, no less than three new low cost airlines have been established as subsidiaries of JAL and ANA: JAL's Jetstar Japan, jointly with Australia's Jetstar; ANA's Peach (minority held with Hong Kong interests involved) and AirAsia Japan, jointly wtih AirAsia. These will reshape the country's domestic and short haul international markets, operating with unit costs around half of those of their part parents.
The main international airport is Tokyo Narita (New Tokyo International Airport) while Tokyo Haneda Airport is the capital's Tokyo’s original international airport that now mainly services domestic (but after opening a fourth runway in late Oct-2010 dramatically increased international slots). Osaka’s Kansai International Airport and Nagoya’s, Central Japan International Airport Centrair or Chubu Airport are also very busy international airports.
Japan has concluded bilateral agreements on international air services with over 50 countries and regions.
Airports in Japan
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There are 103 A380s in service as of early May-2013. Emirates has 33 and Singapore Airlines has 19, so when assessing network scheduling, these two and their hubs predominate: of the 1,048 weekly A380 flights, 402 are from Emirates alone. Dubai and Singapore airport see the most A380 flights.
But there are some less predictable statistics. The airport to see the most A380 operators is Hong Kong followed by Paris and Los Angeles. The largest A380 destination that is not (yet) an A380-hub is London Heathrow. The UK and USA are the most common A380 destinations after Australia, Singapore and the UAE. Asia, not the Middle East, sees the most A380 flights; South America sees none. Guangzhou-Shanghai Pudong is the shortest A380 route at 1,202km while Los Angeles-Melbourne is the longest at 12,751km. Qantas and Lufthansa have the highest average sector length while Thai Airways is placing the most number of cycles – about two – on its aircraft per day. Qantas and Air France are placing the least (just over one).
South Korea-Japan airline market sees structural change from LCCs, political tension & weakening yen
The once tidy and highly profitable Japan-Korean market is undergoing fundamental change – accompanied by double-digit yield declines.
It is difficult to identify precisely which ingredients are provoking the greatest change in the South Korea-Japan airline market. First, in mid/late 2012 the market was transformed as new airlines entered and others added capacity; these were mainly LCCs with unprecedented low fares. Then late 2012 saw Japanese outbound tourist numbers fall sharply due to political tensions between South Korea and Japan over largely uninhabited but disputed islands.
In 2013 the Japanese outbound market remains soft as the yen weakens. While the international political situation will eventually cool down, the Korean response has been to target individual tourists rather than tour groups, a change that was long overdue in any event.
But the difference now is that those individuals have LCCs to provide for their needs. These carriers are here to stay, and they will grow – for the usual reasons, but also due to the weakening yen. While the economic and political factors favour the Korean side, it is the Japanese side that has a larger share of the market.
Air NZ has returned to “growth mode” adding capacity to North American routes, resuming daily operations to Tokyo and Shanghai and strengthening its short-haul network.
After restoring its long-haul network to profitability and reporting a 300% increase in underlying profit for the first half of FY2013 Air NZ is focusing on developing a partnership-based Pacific Rim network.
The carrier has forged an alliance with Cathay Pacific on the Auckland-Hong Kong route and consolidated its China mainland capacity to Shanghai, dropping Beijing. Capacity to North America has been increased partly taking advantage of being handed a monopoly on the trans-Pacific after Qantas pulled its Melbourne-Auckland-Los Angeles service in May-2012, redeploying the A330 capacity in the Australian domestic market to support its domestic battle with Virgin Australia.
Closer to home, a new short haul fleet of A320s and ATR72-600s are arriving to drive domestic growth and keep a menacing Jetstar at bay.
Singapore Airlines' (SIA) long-haul low-cost subsidiary Scoot is further exploiting the absence of a local LCC in Taiwan by selecting Singapore-Taipei-Seoul Incheon as its seventh route. Scoot is already the largest low-cost carrier serving Taiwan, which has the lowest LCC penetration rate among major Asian markets. Following the mid-2013 launch of Jetstar Hong Kong, Taiwan will also be the last remaining medium or large-size market in Asia without a local LCC.
Scoot launched service in Sep-2012 on the Singapore-Taipei-Tokyo Narita route, which the carrier now serves daily. The carrier has been focusing primarily on stimulating demand in the local Singapore-Taipei and Taipei-Tokyo markets rather than on Singapore-Tokyo through passengers.
Scoot will similarly focus on the under-served Taipei-Seoul market after launching the Singapore-Taipei-Seoul route on 27-May-2013 with an initial three weekly frequencies. The new route will also boost Scoot’s presence in the competitive Singapore-Taipei market as the additional three weekly flights make Scoot the largest carrier on the route, just ahead of SIA.
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.
Hawaiian Airlines faces a challenging time during 1H2013 as its efforts to diversify outside of the Hawaii-US west coast market during the last few years need more time to bear fruit. Its ambitious long-haul expansion is accompanied by the introduction of a new inter-island subsidiary and the reworking of other portions of its inter-island network.
All of the changes Hawaiian is undertaking or planning to introduce are intended to bolster efforts to preserve its profitability, which has been fairly consistent during the last few years. But in the near future the carrier is facing pressure as its new long-haul Asian markets spool up and increases in competitive capacity create pressure in its trans-Pacific service to the continental US.
While the strategy Hawaiian is adopting to persevere in the long-term is solid, the airline might be attempting to accomplish too much too fast, which in the shorter-term is creating pressure on yields and unit revenues.