All Nippon Airways LCC saga takes another twist


All Nippon Airways (ANA), which has been talking about establishing an LCC unit since 2004, is now reportedly considering launching or buying an Asian budget carrier, possibly by Mar-09.

ANA has established an Asian strategy group that will shift its base to Hong Kong next month to expand its analysis of regional carriers. The proposed carrier might even be based outside Japan. In the past, the airline has expressed concerns about rising competition with Chinese carriers and shifting the strategy group to Hong Kong could signal ANA is looking at options for partnering with a Mainland airline to develop services into Japan with a lower cost base.

It is the latest in a series of announcements by the carrier as it prepares to deal with an onslaught of competition when a new runway opens at Tokyo Haneda Airport in late 2010.

Earlier announcements focused on the domestic market, to head off competition from Skymark, Air Do and Japan Airlines, although the most recent announcements have focused on the international market – indicating where ANA sees the biggest threat going forward.

ANA’s LCC subsidiary announcements
25-Mar-04 First reports surface that ANA is planning to establish a subsidiary by late 2004 to operate low cost services with four or five B737s, based at Fukuoka, operating to regional airports in Japan. ANA was to establish a preparatory office at Air Nippon by Apr-04 for the new company.
07-Jun-04 ANA announced plans to launch a low-cost arm by Spring 2005, mainly using B737s, though ANA stated other aircraft could be added to the fleet. Talks with pilots' union were said to be “proceeding smoothly”.
06-Aug-04 The proposed LCC gets a name, “Air Next”, to be based at the Southwestern island of Kyushu. Services with two Air Nippon B737-500s were to commence in Jun-05, rising to 100 flights per day by 2007.
01-Oct-04 Further Air Next details confirmed – to operate domestic routes from Fukuoka or Okinawa currently served by Air Nippon. Fleet expected to rise to seven aircraft by the end of 2008.

ANA President Mineo Yamamoto stated ANA will launch an LCC “before 2009” under its own name. Indicates the carrier will be based at Tokyo Haneda Airport.

ANA: "What has happened to US airlines might be repeated in Japan if we fail to offer low-cost fares to compete with such newcomers in the industry", Mineo Yamamoto, President. Source: Nikkei, 25-Jan-06


ANA stated it may establish a new domestic LCC and separate international carrier, or one carrier for both markets. ANA is also considering restructuring an existing subsidiary airline “to better compete with cheaper overseas airlines”.

ANA: “In 2009, competition will increase and low-cost carriers, particularly from elsewhere in Asia, will start flying into Tokyo. We have to be well prepared for it”, Mineo Yamamoto, President. Source: Financial Times, 14-May-06.

09-Sep-06 ANA confirmed it is considering launching two LCCs - one for domestic services and one for international services - by 1H07. The new carriers would be launched as subsidiaries of ANA and would charge lower fares by significantly cutting the costs of in-flight services.

ANA stated it is considering establishing an LCC “to serve Asia”, with a decision to be made by 2010.

ANA: “The cost structure of Asian [budget] airlines is half that of ours. We are considering creating a low-cost company to serve Asia, because if one of them were set up in China it would pose a big threat to ANA… We can take advantage of the wait [for the completion of the runway expansions at Tokyo] to study the creation of a low-cost company and decide whether to launch one or not”, Mineo Yamamoto, President & CEO. Source: AFP, 31-May-06.


ANA announces plans to launch an Asian LCC in the 2008/09 financial year. The airline could be established under a JV with another Asian airline, although acquiring another firm is also an option. ANA is to set up an office in Hong Kong from Apr-08 to “conduct market research and explore possibilities”.

ANA: "We are seriously examining the market and the likelihood of low-cost carriers flying into Haneda after it gets its fourth runway in October 2010, and how we will take them on if they do. Setting up an airline from scratch is an option, as is acquiring a new one, or possibly setting up a joint venture. We are seriously looking at the options now”, Rob Henderson, Spokesman. Source: Thomson Financial, 26-Mar-08.

Source: Centre for Asia Pacific Aviation

The key message is that ANA – and its rivals – can no longer afford to procrastinate behind the insulating effects of a lack of capacity at Tokyo’s airports and regulatory protection. Tokyo’s “big boom” is now just two years away, while increasing liberalisation by the Japanese government (including its Asian Gateways Plan) and the Asia Pacific region’s expanding fleets will intensify competition in North Asia.

More importantly, foreign LCCs will not wait for fresh capacity to come on stream at Haneda Airport, when less expensive options for serving the high potential Japanese market already exist.

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