Part 2: ANA & JAL move to focus on international, LCC subsidiaries left to grow domestically

Airline Leader

JAPAN'S FULL SERVICE airlines are shifting away from their domestic heartland as they prepare for international revenue to overtake domestic revenue. In the long term ANA will reduce its domestic network by 3% by maintaining frequencies but using smaller aircraft. JAL will grow its domestic market by 3% but through upgauging as it reduces its domestic fleet.

There will be a net increase of 20 narrowbody aircraft in ANA's LCC fleet, including long range narrowbodies. JAL has a minority stake in Jetstar Japan, which will grow its fleet, but JAL also wants to deepen its involvement in the LCC sector, also seeing the potential in international long haul as others around them do so.

  • ANA plans to reduce its domestic capacity by 3% by 2022, while JAL aims to grow its domestic market by 3% through upgauging.
  • ANA will maintain frequencies but use smaller aircraft, while JAL will slightly push load factor improvements.
  • ANA's LCC platform Peach expects to grow its fleet from 35 to 55 narrowbody aircraft, including long-range narrowbodies.
  • JAL's LCC, Jetstar Japan, plans to operate 28 aircraft in 2019 and is interested in exploring long-haul opportunities.
  • Both ANA and JAL see LCC expansion as an important growth development for domestic and short-haul international services.
  • The shift towards LCCs is driven by weakening domestic demand, the growth of international traffic, and the need to generate more revenue from international flying.


  • LCCs are an important domestic - and potentially international - growth tool for All Nippon Airways (ANA) and Japan Airlines (JAL)
  • ANA will reduce domestic capacity by 3%; frequencies to be maintained through the use of smaller aircraft;
  • JAL will grow domestically by 3%, but with fewer aircraft as upgauging occurs;
  • The outcome is likely to be a significantly increased role for LCCs in Japan's domestic market.

ANA reduces domestic capacity and JAL cuts domestic fleet
ANA and JAL are both planning downward capacity changes in the domestic Japanese market, but in different ways - and, in Japanese style, without dramatic shifts.
ANA will cut domestic capacity (ASKs) by 2022. Domestic capacity in 2022 will be 3% smaller than in 2017, but ANA will retain its leadership position in the domestic market - enlarged when the smaller airlines that ANA partners with and invests in are included. ANA plans to maintain frequency but use smaller aircraft. Capacity increases at the smaller airlines may offset ANA's mainline reduction.




JAL plans a 3% domestic ASK increase by 2020, but this will be done with a reduction of four domestic aircraft. JAL will upgauge and slightly push load factor improvements.
Since JAL's bankruptcy restructuring, its domestic network has been approximately two thirds the size of ANA's. Once ANA reduces its mainline network, the result could be that JAL's domestic network will be slightly larger, at 71% the size of ANA's.
LCC expansion is an important growth development for ANA and JAL
LCC subsidiaries feature in ANA and JAL's growth plans for development in domestic, short haul international and (soon) longer services.
ANA expects its LCC platform Peach (which will be the surviving brand as the Peach-Vanilla Air merger completes) to grow their combined fleet from 35 narrowbody aircraft to 55.
ANA's LCC growth includes an unspecified number of long range narrowbody aircraft, such as the A321LR. Peach operates 20 A320ceos and has orders for 17 A320ceos/neos. Vanilla Air operates 14 A320ceos with four A320ceos on order.



In Service

In Storage

On Order (Confirmed)

On Order (Unconfirmed)


20 0 7 0


0 0 10 0


20 0 17 0

JAL's LCC, Jetstar Japan, operates 21 A320ceos with a further three on sublease. Jetstar Japan expects to operate 28 aircraft in 2019, and the airline is yet to decide if or when it should operate the A320neo. Jetstar Japan has not stated any intent to operate longer range aircraft - either on the narrowbody or widebody platform.
Jetstar Group CEO Gareth Evans, speaking at the CAPA Global LCC Summit in Mar-2018, described the potential for long haul low cost operations from Japan as "very attractive", adding: "We are very interested in exploring the long haul opportunities out of Japan". Mr Evans said the launch of such operations would not happen immediately and would require the right aircraft.
JAL does not comment actively about its LCC business, partially because JAL has only a minority stake in Jetstar Japan, whereas ANA has a majority stake in Peach and wholly owns Vanilla. After the Peach-Vanilla Air merger, ANA will retain majority ownership in Peach.
JAL's management plan makes only a passing mention of LCCs, saying JAL will "deepen relations with [our] foreign-affiliated Japanese LCC partner", i.e. Jetstar Group.
The phrasing, intentionally or not, does not explicitly lay out a larger growth commitment for Jetstar Japan. It seems to suggest that JAL wants to achieve more from a LCC platform and may be limited by its minority-only stake in Jetstar Japan.

ANA REVENUE PLAN (JPY): FY2014, FY2017, FY2022

Outlook: Japan's majors shift away from the domestic heartland - spelling further emphasis on domestic LCCs
Domestic is the market to which ANA and JAL have been most exposed and feel comfortable. But domestic demand is weakening as Japan's population ages.
There is a gradual shift to LCCs as younger consumers are willing to try new types of airlines, while foreigners travelling domestically are accustomed to using LCCs from other markets. International traffic is growing and freight - another area on which ANA and JAL are adding focus - offer opportunities, but both are more complex and competitive than the domestic market.
The changing emphasis is necessary as ANA and JAL prepare for more revenue to be generated from international flying than domestic. Within the international category, ANA and JAL are shifting from domestic sales to majority foreign sales.
Despite this evolving repositioning, there is no prospect that Japan's two dominant airlines will allow their supremacy to be seriously challenged at home. The Spring and AirAsia brands are also now established in Japan and ANA and JAL will be anxious to ensure they do not make significant inroads.
The outcome should be an interesting and increasingly competitive domestic LCC marketplace.

JAL REVENUE PLAN: FY2016, FY2017, FY2018, FY2020