ANA LCC subsidiary. All Nippon Airways to establish subsidiary outside Tokyo. JAL next?


ANA President and CEO, Shunichiro Ito, yesterday confirmed that the airline has resumed preparations to establish a low cost airline subsidiary. Previous planning to set up a Hong Kong based subsidiary was put on hold in Apr-2009, when economic conditions made it impossible.

ANA's "Outline of the next term management strategy", which was released on 30-Oct-2009, touched briefly on the plan under the heading of consideration of a new international and domestic aviation business model - outside the Tokyo metropolitan area.

More complete details of the ANA LCC plan are to be formulated and announced in the first quarter of CY2010, the last quarter of the carrier's financial year.

The Tokyo area airports are high cost and are dominated by full service airlines - including ANA. So, avoiding cannibalising its own services will be an integral part of ANA's approach. ANA currently codeshares with AirDo, Ibex and SkyNet Asia, which all limit their operations to the domestic market.

The announcement, which is not unexpected, comes at an interesting time in the evolution of Japan's airline industry, as the government rushes to bail out Japan Airlines. Part of that process involves restructuring JAL and the ANA move must surely provoke a similar response from its main competitor.

If that is the case, Japan's LCC market, along with the short haul regional international markets, will quickly be affected. Northeast Asia is the one part of the world where genuine LCC operations are still almost non-existent, but there is enormous potential for expansion, with numerous major regional city pairs underserved.

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