Zipair: a defensive move by JAL as AirAsia X expands in Japan 


Japan Airlines' (JAL) subsidiary Zipair will become the thirteenth widebody LCC in Asia Pacific in 1H2020 and the first in Japan. Zipair will initially operate two routes within Asia, from Tokyo to Bangkok and Seoul, before expanding into the long haul market in 2021.

JAL is taking a relatively conservative approach with a five-year business plan that includes only two additional aircraft per year, resulting in 10 787s by the end of 2024. Zipair's first two 787s are -8s from JAL that will be converted in 2H2018 to a high density two class configuration.

Zipair and the AirAsia X Group will be the only all-widebody low cost operators in Asia Pacific. Feed is typically a crucial component of the long haul low cost market; AirAsia X relies on its sister short-haul airline group AirAsia and Zipair can use Jetstar Japan.

AirAsia X is now the largest airline group in Japan's emerging medium/long haul market, operating 10 routes. AirAsia X has ambitious plans for Japan, including several routes to the continental US, which JAL will likely try to combat using Zipair.

  • Japan Airlines' subsidiary, Zipair, plans to launch medium/long-haul low-cost carrier services in summer 2020, initially using two Boeing 787-8 aircraft.
  • Zipair will initially operate short/medium-haul routes within Asia, such as Tokyo-Bangkok and Tokyo-Seoul, before expanding into long-haul routes in 2021.
  • The airline aims to have a conservative expansion plan, adding two aircraft per year, resulting in a fleet of 10 aircraft by the end of 2024.
  • Zipair will become the 13th widebody low-cost carrier in the Asia Pacific region and the first in Japan.
  • AirAsia X is currently the largest airline group in Japan's emerging medium/long-haul market, operating 10 routes, and plans to expand further, including routes to the continental US.
  • Zipair will work with Jetstar Japan for short-haul feed and will not compete with Jetstar in the Australia market.


  • Japan Airlines' medium/long haul low cost airline subsidiary Zipair plans to launch services in summer 2020, initially using a fleet of two 787-8s.
  • Zipair will operate from Tokyo to Bangkok and Seoul to start with, but plans to start long haul services in 2021 - once it secures an ETOPS rating.
  • Zipair has a relatively conservative expansion plan, consisting of only two additional 787s per year towards a total of 10 aircraft by the end of 2024.
  • AirAsia X will likely remain the largest widebody LCC operator in the Japanese market, since it already has 10 routes, and plans to add several more over the next few years.
  • AirAsia X and Zipair are both targeting the Japan-continental US market, with services likely launching from both competitors in 2021.

The expansion of long haul low cost services in the North Asian market, including in Japan, will be discussed at the LCCs in North Asia Summit on 24/25-Jun-2019 in Cebu. For more details on the summit click here.

The director of JAL's Zipair project (previously known as T.B.L.), Hiroyuki Uehara, discusses the strategy of the group's new medium/long-haul low cost airline, including plans for developing the fleet and network

JAL names its new medium/long haul LCC, Zipair

JAL announced on 8-Mar-2019 that Zipair Tokyo would be the name of "Japan's first medium to long haul low cost carrier". At the same time, JAL announced the selection of Tokyo Narita to Bangkok Suvarnabhumi and Seoul Incheon as Zipair's first routes.

Initially, in May-2018, JAL announced plans to launch a medium/long haul LCC in 2020 using two 787-8s. The new airline subsidiary did business under the name T.B.L. (standing for To Be Launched) until the 8-Mar-2019 announcement.

JAL secretively began a long haul low cost project in 2017. The project has since been led by Hiroyuki Uehara, JAL's VP business development and T.B.L.'s director/executive officer. Mr Uehara built up the project team from one person (originally he was alone) to nearly 50 employees by the time T.B.L. became Zipair.

Staffing levels will increase significantly over the next few months as Zipair works towards securing an air operator's certificate (AOC). Zipair has announced that a series of recruitment briefings will be held in Apr-2019 to fill positions in airport operations, planning services and flight attendants, among others.

Zipair begins AOC process

On 8-Mar-2019 Zipair submitted an AOC application with Japan's Ministry of Land, Infrastructure and Transport. Mr Uehara told CAPA TV in a 25-Feb-2019 interview on the sidelines of the CAPA Global LCC Summit in Singapore that it typically takes four to five months for an AOC to be granted in Japan.

However, he said the entire process from AOC application to launching takes more than six months when the time to complete checks and inspections once the AOC is secured is included. Zipair is aiming to launch flights in the early part of the summer 2020 schedule (which begins in late Mar-2020) as it would like to be operating for a few months before the start of the 2020 Tokyo Olympics.

Mr Uehara said the "earliest possible launch" is 1H2020, without disclosing an exact date.

Zipair will initially operate short/medium haul services

Although JAL established Zipair to pursue opportunities in Japan's long haul market, long haul services will not be operated in the first year. Mr Uehara explained the need to operate shorter routes within Asia from the start, due to the time required to meet ETOPS requirements. (ETOPS stands for Extended-range Twin-engine Operational Performance Standards; new airlines or existing airlines operating a new aircraft type need to complete a certain number of hours on flights over land before securing ETOPS permission from authorities - this authorises flights over large bodies of water where the nearest diversion airport can be a few hours away.)

"We chose the 787-8 because of the long range … but before we are granted ETOPs we need to fly nearby within Asia", Mr Uehara said. "That's at least for the starting year. For one year."

In its launch announcement Zipair stated that its first routes would consist of Tokyo Narita to Bangkok, Tokyo Narita to Bangkok Suvarnabhumi and Seoul Incheon.

Tokyo-Bangkok is a medium haul route - it is approximately a 7hr flight from Tokyo and a slightly less than 6hr flight from Bangkok. Tokyo-Seoul is a short haul route - it is a slightly longer than a 2hr flight in both directions.

Tokyo-Bangkok and Tokyo-Seoul are very large trunk routes served by several full service and low cost carriers. There are 44,000 weekly one-way seats from Tokyo to Bangkok (all airports) and 60,000 weekly one-way seats from Tokyo to Seoul (all airports), based on CAPA and OAG data for the week commencing 18-Mar-2019.

Zipair to become seventh LCC to compete on Narita-Incheon route

Zipair will become the 12th airline and seventh LCC in the Tokyo-Seoul market. On the Tokyo Narita-Seoul Incheon route specifically, Zipair will become the 10th airline and seventh LCC.

The six LCCs already competing in this market are Air Seoul, Eastar Jet, Jeju air, Jin Air, Peach and T'way. They already account for nearly 40% of total Tokyo-Seoul capacity (all airports) and more than 60% of Narita-Incheon capacity.

Korean Air's LCC subsidiary Jin Air is the largest LCC in the Tokyo-Seoul market, with a 9% share of total Tokyo-Seoul capacity (based on OAG schedules for the week commencing 18-Mar-2019). Jin is also the only LCC operating widebody aircraft in the Tokyo-Seoul market; it operates a mix of 737s and 777s, whereas the other five LCCs on this route only operate narrowbody aircraft (737s or A320s).

Three independent Korean LCCs - Jeju Air, T'way and Eastar Jet - are only slightly smaller than Jin. Each has a 7% to 8% share of Tokyo-Seoul seat capacity.

Eastar Jet was the first LCC in the Tokyo-Seoul market, launching services from Incheon to Narita in Jul-2011. Jeju Air entered the market in Jul-2013; Jin Air, T'way, Air Seoul and Peach have all entered since the beginning of 2016, driving a large increase in Tokyo-Seoul LCC capacity.

Tokyo-Seoul LCC one-way seat capacity by airline: Sep-2011 to May-2019

Incheon is also served from Tokyo Haneda and there are some flights from Haneda to Seoul Gimpo (but no flights from Narita to Gimpo). The Haneda-Incheon route is small as it is limited to one daily flight from three airlines - Asiana, Korean Air and Peach.

The Haneda-Gimpo route, which is popular with business travellers because of the convenience of the two airports, is only served by the four main full service airlines - All Nippon Airways (ANA), JAL, Asiana and Korean Air. Each of these airlines is limited to three daily flights between Haneda and Gimpo.

Zipair enables JAL to regain presence on Narita-Incheon route

While JAL competes in the Tokyo-Seoul market, it is a relatively small competitor, with approximately a 10% share of total seat capacity.

JAL can therefore use Zipair to expand its market share in one of Japan's largest international markets. Its rival ANA is already using its own LCC subsidiary Peach to compete in this market. Asiana uses its LCC subsidiary Air Seoul and Korean Air uses its LCC subsidiary Jin Air.

JAL is now losing out in this key market as it does not have an LCC presence. In fact, of the four main full service airline groups based in Japan and South Korea, JAL is the only one without an LCC presence in the Tokyo-Seoul market. (Jetstar Japan, which is partially owned by JAL, is mainly a domestic airline and does not serve Seoul.)

JAL and ANA currently only serve Seoul from Haneda. Therefore, Zipair will enable JAL to regain a presence on the Narita-Incheon route, which JAL dropped in Mar-2018.

Mr Uehara said the new LCC will operate alongside JAL on some routes while opening up other routes that JAL does not serve. For the trunk routes where there is "big demand we can segregate the target".

Although JAL no longer serves Narita-Incheon, the broader Tokyo-Seoul market is served by JAL and is certainly large enough to justify both an FSC and LCC. Tokyo-Bangkok is also a large enough market for an airline group to offer both an FSC and LCC product.

Zipair will become fifth LCC in the Narita-Bangkok market

Zipair will become the eighth airline in the Tokyo-Bangkok market and the fifth LCC. In fact, Tokyo-Bangkok is already the world's largest medium/long haul LCC market, with 42 weekly one-way flights and 16,000 weekly one-way seats.

Thai AirAsia X, which began serving Narita in 2014, is the market leader and operates three daily A330-300 flights.

NokScoot, Scoot and Thai Lion each operate one daily flight with 777-200s, 787-9s and A330-300s respectively. Thailand-based NokScoot and Singapore-based Scoot (which has fifth freedom rights from Bangkok to Tokyo) are sister airlines, giving the Scoot brand two daily flights.

Tokyo-Bangkok LCC one-way seat capacity by airline: Sep-2011 to May-2019

AirAsia X, Scoot/NokScoot and Thai Lion link Narita with Bangkok Don Mueang.

ANA, JAL and Thai Airways link Narita with Bangkok Suvarnabhumi; all three airlines also operate from Haneda to Suvarnabhumi.

ANA and Thai each have five daily flights in the Tokyo-Bangkok market and JAL has four daily flights. ANA has three flights from Haneda and two from Narita; Thai has two from Haneda and three from Narita, and JAL has two from each airport.

LCC capacity in the Tokyo-Bangkok market has already doubled over the past year

Full service airlines still account for approximately 65% of total Tokyo-Bangkok seat capacity, led by Thai with 29% (based on OAG schedules for the week commending 18-Mar-2019). JAL has 16% and is slightly behind ANA's 19%, but the JAL Group should be able to overtake ANA after the launch of Zipair.

FSC market share has dropped significantly over the past year - from 76% a year ago, in mid-Mar-2018.

Tokyo-Bangkok LCC capacity has doubled, with Thai AirAsia X adding a third daily flight and both NokScoot and Thai Lion entering the market. While Tokyo-Bangkok is a huge and growing market, the additional LCC capacity has impacted yields and profitability.

It will not be easy for Zipair to compete against four more established LCCs (or three brands, as Nok and NokScoot are essentially one). Zipair will be the only LCC operating from Narita to Suvarnabhumi as the existing LCCs all serve Bangkok Don Mueang, but this is not a significant differentiator. Zipair will clearly have a higher cost base than its LCC competitors given that it is based in Japan, and will at least initially lack scale due to its small size.

Zipair will become the 13th widebody LCC in Asia Pacific

NokScoot, Scoot, Thai AirAsia X and Thai Lion are four of only 12 Asia Pacific-based LCCs currently operating widebody aircraft.

The other eight are: Jetstar Airways, AirAsia X Malaysia, Indonesia AirAsia X, Jin Air, Lion, Beijing Capital, Lucky Air and Cebu Pacific. Indonesia AirAsia X stopped operating scheduled services in Jan-2019 and is now only operating charters.

Asia Pacific widebody LCC fleet, ranked by operator: 18-Mar-2019

Rank Airline IATA Number of aircraft
1 AirAsia X D7 24
2 Scoot TR 17
3 Beijing Capital Airlines JD 11
4 Jetstar Airways JQ 11
5 Thai AirAsia X XJ 10
6 Cebu Pacific 5J 8
7 NokScoot XW 5
8 Lucky Air 8L 4
9 Jin Air LJ 4
10 Lion Air JT 3
11 Thai Lion Air SL 3
12 Indonesia AirAsia X XT 2

From a group or brand perspective there are only eight players - AirAsia X, Beijing Capital, Cebu Pacific, Lucky, Jetstar, Jin, Lion and Scoot. Zipair will be the ninth.

All of the existing eight players have narrowbody aircraft in their fleets or have sister airlines operating narrowbody aircraft.

Beijing Capital, Cebu Pacific, Lucky, Jetstar, Jin and Lion and Scoot mainly operate narrowbodies. Singapore-based Scoot inherited its narrowbody fleet after merging with Tigerair in 2017.

AirAsia X is an all-widebody operator but has feed from AirAsia, which only operates narrowbody aircraft. Thailand-based NokScoot also has an all-widebody fleet at the moment but has feed from Nok and will soon introduce its first narrowbody aircraft.

Zipair to work with Jetstar Group and avoid Australia market

Zipair plans to focus on the point-to-point market but will be able to use Jetstar Japan for short haul feed. Jetstar Japan's largest base is Narita, where it has 12 domestic and four international routes.

JAL and Qantas each hold a 33% stake in Jetstar Japan. Australia-based Jetstar Airways, which is 100% owned by Qantas, also serves Narita: from Cairns and Gold Coast using 335-seat two class 787-8s. Jetstar Japan feeds Jetstar's two Narita-Australia routes with connections available to several domestic destinations throughout Japan.

Zipair does not have any plans to serve Australia, given Jetstar's long-standing presence in the Japan-Australia market. Jetstar has been serving Narita since 2008 and Osaka Kansai since 2007. "We aren't necessarily going to challenge them but many other destinations we can find", Mr Uehara said.

Jetstar is a pioneer in the long haul low cost segment, having begun operating long haul services in 2006 with A330s. Jetstar has operated 787-8s, the same aircraft type Zipair has selected, since 2013. Naturally Zipair is able to learn from Jetstar's experience with the 787 and its experiences with the long haul low cost model.

"Because of anti-trust not everything is open", Mr Uehara said. "But of course for these six, seven years we have been learning a lot from Jetstar Group in terms of how to manage LCCs under full service carrier, or how to combat a carrier in between like Virgin Australia. So we learn a lot of their business model already."

Zipair plans two-class configuration

Jetstar configures its 787-8s with 335 seats, featuring 314 economy eats in 3x3x3 configuration and 21 recliner style business class seats in 2x3x2 configuration.

JAL has not yet decided on a configuration but will likely end up with a similar seat count as Jetstar. It will also likely end up offering a similar business class product to Jetstar's business class, which is closer to premium economy than the long haul business class products of Qantas or JAL.

Mr Uehara said the new LCC plans to have a two class configuration that is denser than JAL's 787-8s while still "suitable for long haul travel". JAL currently configures its 787-8s with between 161 and 206 seats.

JAL has 25 787-8s, which were delivered between 2012 and 2016, according to the CAPA Fleet Database. Mr Uehara said the first two 787-8s will be retrofitted in autumn 2019. The aircraft selected for Zipair are based on the maintenance schedule as it is most efficient to do a retrofit at the same time as a heavy check.

Jetstar Japan and Zipair both target Southeast Asia

While Jetstar Japan has no plans for widebody aircraft, in late 2018 the airline announced a commitment for two A321neoLR long range narrowbody aircraft. Jetstar Japan intends to use these aircraft to launch services to Southeast Asia in 2020, potentially targeting some of the same routes being considered by Zipair.

See related report: Low cost long haul narrowbody aircraft: Asian gamechanger?

However, Mr Uehara is not concerned about potential overlap with Jetstar Japan's new A321neoLR operation. Although Jetstar Japan and Zipair are not able to talk to each other about their network plans, there is ample space in the medium/long haul market from Japan for both airlines. "Japan Airlines definitely keeps a good relationship with Jetstar Group", Mr Uehara said. "Asia is growing and their brand is strong."

Zipair also plans to operate from Japan to Europe and North America - two markets the Jetstar Group has no intentions of serving. Mr Uehara said long haul routes are expected to begin in 2021 with the delivery of two additional 787s. Zipair will not likely announce its first long haul route before 2020.

Zipair has a conservative expansion plan

Zipair has a relatively conservative five-year business plan that consists of only two additional aircraft per year. Mr Uehara said that a total of 10 aircraft is expected in the fifth year, 2024.

Assuming a maximum of one route per aircraft, Zipair would operate up to 10 routes in summer 2024 - likely five routes within Asia and five long haul routes to Europe and North America.

AirAsia X will almost certainly remain the leader in Japan's medium/long haul low cost market. The AirAsia X Group currently operates 10 routes from Japan: Bangkok to Fukuoka, Osaka, Sapporo and Tokyo Narita; Kuala Lumpur to Fukuoka, Osaka, Sapporo and Tokyo Haneda; and fifth freedom routes form Osaka to Honolulu and Taipei.

AirAsia X is aiming to launch Japan-mainland US services in 2021, using a higher gross weight variant of the A330-900neo and its fifth freedom rights.

AirAsia Japan, which launched operations in late 2017 and currently operates three A320s on short haul routes, could also potentially expand into the long haul market using A330s. However, at the moment AirAsia Japan has no plans to add widebody aircraft and the group instead is looking at using AirAsia X Malaysia to expand in the Japanese long haul market.

Scoot will also likely remain larger than Zipair in the Japanese market for at least a few years. However, Scoot is unlikely to compete in the Japan-mainland US market. Scoot now competes against AirAsia X in the Osaka-Honolulu market but is dropping this route in early May-2019, resulting in a reduced (although still significant) presence in Japan's medium/long haul low cost market.

LCC widebody capacity from Japan (excluding Korea*): week commencing 18-Mar-2019

Rank Airline Number of routes Number of weekly frequencies One-way weekly seats
1. Thai AirAsia X 4 49 18,473
2. AirAsia X Malaysia 6 33 12,441
3. Scoot 6 33 11,335
4. Jetstar Airways 3 18 6,030
4. NokScoot 2 13 5,395
5. Cebu Pacific 1 7 3,052
6. Thai Lion 1 7 2,744

Zipair enables JAL to experiment in the emerging long haul low cost space

By launching Zipair the JAL Group will be able to compete more effectively against AirAsia X. While the initial business plan for Zipair seems defensive and conservative, JAL can always accelerate Zipair's expansion, particularly if AirAsia X (or others) start to expand aggressively in the Japan-US market.

JAL decided to launch a medium/long haul LCC after concluding that there were huge opportunities in this dynamic segment of the market. Japan's medium and long haul markets are huge and growing, but are so far relatively unpenetrated by LCCs.

Mr Uehara said in particular there are opportunities in the Japan-US market: "If we can give a good business model with a low fare plus choices of services, personal offers I think it can generate the demand."

He told CAPA TV: "JAL needs to pursue the two piers - not only full service but also LCCs. We thought long haul has more chance. That's why we started this project."

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