Peach Aviation to enter Tokyo-Osaka route, challenging Japan's entire transport industry

The story of low-cost carriers in Japan follows not just the classic script of the youthful carrier taking on legacy incumbents. It also borrows from the Indian and Latin American experience of LCCs providing an alternative to long bus rides. And in a situation unique to Japan, LCCs provide an inexpensive alternative to pricey high-speed trains.

It is this broad context that explains Peach Aviation's entry into the Tokyo-Osaka market, which connects Japan's best-known cities but is not the country's largest domestic air route. Peach and Jetstar Japan will offer 3,780 weekly one-way seats, a drop in the bucket to the over 111,000 offered by airline competitors on this 405km route. But airline incumbents are not the sole target: one-way fares on the shinkansen cost about USD140 while an overnight bus, sometimes without bathrooms, could be USD32-100 depending on availability. So a one-way fare from USD42 on Peach or Jetstar Japan represents a seismic change. Competing with the shinkansen, the LCCs do require a trip out to Narita, but the fare is a third of the price. Competing with buses, the LCCs may be cheaper or about the same but with comfort and a shorter journey time. The story of LCCs in Japan is young and they are still finding traction, but their impacts are indisputable and will steadily grow.