03-Nov-2011 2:34 PM

Sapporo and Fukuoka feature as AirAsia Japan and Peach Aviation launch destinations

Analysis

Sapporo New Chitose and Fukuoka will feature as launch destinations for both Tokyo Narita-based AirAsia Japan and Osaka Kansai-based Peach Aviation next year, with both All Nippon Airways (ANA) LCC subsidiaries to commence international operations to destinations in South Korea. Among the launch routes, all but one of the launch services being offered by the LCC subsidiaries are existing ANA routes. Meanwhile, Skymark Airlines became the first LCC to establish a hub at Tokyo Narita on 30-Oct-2011 with the launch of Narita Shuttle services.

Summary

AirAsia Japan and Peach Aviation, both ANA LCC subsidiaries, plan to launch operations to Sapporo and Fukuoka in 2012, followed by international routes to South Korea.
AirAsia Japan aims to commence operations in August 2012, while Peach Aviation plans to start in March 2012.
AirAsia Japan plans to operate with A320 aircraft and intends to add long-haul services in 2013.
Peach Aviation has obtained approval to operate from Osaka Kansai to Fukuoka, Sapporo, and Seoul Incheon.
Skymark Airlines has launched Narita Shuttle services, becoming the first LCC to establish a hub at Tokyo Narita.
Jetstar Japan is yet to announce its network but is expected to serve Sapporo, Fukuoka, and Okinawa from Tokyo Narita and/or Osaka Kansai.

AirAsia Japan to launch service to Sapporo, Fukuoka and Okinawa, Busan and Seoul Incheon to follow

AirAsia Japan plans to launch service in Aug-2012 with three domestic routes from Tokyo Narita, followed by two international routes to South Korea in Oct-2012.

The AirAsia-ANA JV LCC applied for operational permission with Japan's Ministry of Land, Infrastructure, Transport & Tourism (MLIT) on 27-Oct-2011 seeking to commence operations in Aug-2012 with service from Tokyo Narita to Sapporo (New Chitose), Fukuoka and Okinawa (Naha). Busan and Seoul Incheon will follow in Oct-2012, according to the carrier's application. "We look forward to expanding our network to serve more guests in due course," AirAsia Japan President Kazuyuki Iwakata said.

Of the AirAsia Japan launch routes, all are already served by at least two carriers. Aside from Busan, all of the launch routes are already served by ANA. The only route not already serviced by an LCC is Tokyo Narita-Fukuoka, although both the international/South Korean routes are only served by South Korean LCCs.

Tokyo Narita Airport to Sapporo Chitose Airport (seats per week, one way): 19-Sep-2011 to 14-Apr-2012

Tokyo Narita Airport to Fukuoka Airport (seats per week, one way): 19-Sep-2011 to 14-Apr-2012

Tokyo Narita Airport to Okinawa Naha Airport (seats per week, one way): 19-Sep-2011 to 14-Apr-2012

Tokyo Narita Airport to Busan Gimhae Airport (seats per week, one way): 19-Sep-2011 to 14-Apr-2012

Tokyo Narita Airport to Seoul Incheon International Airport (seats per week, one way): 19-Sep-2011 to 14-Apr-2012

The route application is the first of a number of major milestones for AirAsia Japan as it accelerates its start-up activities in preparation for the launch of commercial services. It is planning to deploy 180-seat A320 equipment from its home base of Tokyo Narita International Airport. The carrier stated it would soon start recruiting and staff training activities in advance of the expected commencement of commercial flights in Aug-2012. AirAsia Japan plans to operate services with a fleet of A320 equipment.

Looking further ahead and AirAsia Japan CEO Kazuyuki Iwakata, in an interview with Bloomberg on 02-Nov-2011, stated the LCC would add long-haul services in 2013. The airline may offer services to Thailand, Indonesia and Singapore after introducing A330 aircraft, the CEO said. AirAsia Japan may order the A330s with AirAsia to lower costs. The LCC also plans to utilise AirAsia's regionwide operations and marketing to reach a target of 10 million passengers per annum within five years, supported by a fleet of 30 ore more aircraft. AirAsia Japan plans to operate to airports already served by affiliates as it expands on long-haul routes, so it can reduce costs through co-operation in areas such as procurement and distribution. The airline also intends to negotiate lower landing fees at airports it plans to serve.

The CEO added that it does not see All Nippon Airways and Japan Airlines as competitors, as it is seeking to attract a different market segment. However, with AirAsia Japan seeking to handle 10 million passengers within five years, Peach Aviation targeting 6 million passengers, Skymark expanding its domestic network and Jetstar Japan launching operations in 2012, it is almost inevitable that there will be some leakage from the full service operators to the new LCCs in a market which handles less than 100 million passengers per annum.

Peach Aviation to launch service with operations to Sapporo and Fukuoka, followed by Seoul Incheon

Earlier this month, Peach Aviation, another ANA-affiliated LCC, confirmed it had obtained approval from the MLIT to operate from Osaka Kansai to Fukuoka and Sapporo from 01-Mar-2012, followed by service to Seoul Incheon from Mar-2012.

The carrier, which submitted its application on 23-Aug-2011, plans to operate three times daily Osaka Kansai-Sapporo service and four times daily Osaka Kansai-Fukuoka service, supported by its first A320, scheduled for delivery next month. The carrier has subsequently stated all of the major airports in Kyushu are candidates for its operations. International services to/from Fukuoka are also being considered.

Peach Aviation launch schedule

ANA already operates on all of Peach Aviation's launch routes. Peach Aviation will become only the second carrier after ANA to operate Osaka Kansai-Fukuoka service, and will also be the first LCC operator on Osaka Kansai-Sapporo sector. Peach will become the second operator, after ANA, on Osaka Kansai-Seoul Incheon sector.

Osaka Kansai International Airport to Fukuoka Airport (seats per week, one way): 19-Sep-2011 to 25-Mar-2012

Osaka Kansai International Airport to Sapporo Chitose Airport (seats per week, one way): 19-Sep-2011 to 14-Apr-2012

Osaka Kansai International Airport to Seoul Incheon International Airport (seats per week,
one way): 19-Sep-2011 to 14-Apr-2012

Peach, in which ANA has agreed to a 33.4% stake, was announced with plans to operate initially with 10 A320 aircraft leased from GE Capital, commencing operations on 01-Mar-2012. It would first operate domestic services between Kansai and Sapporo and Fukuoka and Seoul in May-2012. The airline was to carry six million passengers by 2015, with fleet of 15-20 leased aircraft. China and Taiwan were to be its main targets.

The new LCC, formed by JV partners All Nippon Airways and First Eastern Investment, named former Ryanair chairman Patrick Murphy as a corporate advisor in Jul-2011. Peach said it plans to announce airfares in late Nov-2011, with fares expected to be about half those charged by major airlines. On 30-Oct-2011, the carrier unveiled its flight attendant uniforms with CEO Shinichi Inoue stating it has already tentatively hired about 100 cabin attendants.

Peach Aviation uniforms

Peach Aviation livery

Osaka Kansai International Airport last month stated construction is under way on the airport's planned LCCT, being developed at a cost of nearly JPY10 billion (USD130 million). Construction of the 30,000sqm terminal is scheduled for completion by autumn 2012. The one-story terminal will be able to handle nine aircraft simultaneously. The airport stated its new LCCT, scheduled to open in 2HFY2012, is part of efforts by the airport to "expand and strengthen LCC-related projects". Peach Aviation is expected to use the terminal.

Jetstar Japan yet to announce network but Sapporo, Fukuoka and Okinawa expected to be served from Tokyo Narita and/or Osaka Kansai

Jetstar Japan, also commencing service next year, has yet to make any route announcement. Jetstar Group CEO Bruce Buchanan earlier this month stated that negotiations with a range of potential suppliers and business partners, including airports across Japan, were "progressing well". Several airports in Japan, the world's third-largest domestic aviation market after the US and China, are vying to be the company's operation base. The carrier has previously stated it expects to operate from Tokyo Narita and Osaka Kansai International, both served by Jetstar, with other destinations under consideration including Sapporo, Fukuoka and Okinawa. Jetstar Japan also plans to ultimately offer short-haul international services to key Asian cities, with Qantas CEO Alan Joyce separately stating international services will commence within a year of launch.

Skymark Airlines launches Narita Shuttle services; JAL Express opens operating base at Haneda

Meanwhile, LCC incumbent Skymark Airlines launched "Narita Shuttle" services connecting Tokyo Narita on 30-Oct-2011. The carrier launched services connecting Tokyo Narita with Asahikawa (two daily services) and Sapporo (once daily) on 30-Oct-2011, with Narita-Naha shuttle service to follow on 08-Dec-2011. This makes Skymark Airlines the first LCC to open a hub at Narita, around 10 months ahead of the commencement of service by AirAsia Japan in Aug-2012.

"We want to try something that no one has ever done," Skymark Airlines president and CEO Shinichi Nishikubo said. The airline plans to expand to operate 25 daily services by Sep-2014 to nine domestic destinations, including Asahikawa, Fukuoka and Sapporo. Skymark selected Narita citing higher operating costs at the downtown Tokyo Haneda. Narita and Haneda have busy schedules and some of the most expensive landing fees on the planet, let alone in Japan. Skymark plans to expand its fleet of B737s from 18 to 27 by Mar-2013 to support the new routes.

Upon the announcement of the Narita Shuttle service on 12-Apr-2011, the carrier also publicised a promotional fare, "Sky Bargain", to celebrate the new launch, offering 28,880 seats at a price of JPY980, which attracted enormous attention from the public. Shinichi Nishikubo, president and CEO of the company said, "We will strive to realise the final business model of domestic LCC with the Narita route." He expressed the company will continue to work for even lower airfares.

Skymark Airlines operates a domestic network covering Asahikawa, Fukuoaka, Ibaraki, Kagoshima, Kita Kyushu Kokura, Kobe, Kumamoto, Miyako Hirar, Nagasaki, Nagoya Chub Centrair, Okinawa Naha, Sapporo Chitose, Tokyo Haneda and Tokyo Narita Airports.

Meanwhile, JAL Express has established its head office and operating base at Tokyo Haneda Airport, effective 31-Oct-2011, moving there from Osaka Itami Airport.

Sapporo and Fukuoka feature as AirAsia Japan and Peach Aviation launch destinations

AirAsia Japan to launch service to Sapporo, Fukuoka and Okinawa, Busan and Seoul Incheon to follow

Peach Aviation to launch service with operations to Sapporo and Fukuoka, followed by Seoul Incheon

Jetstar Japan yet to announce network but Sapporo, Fukuoka and Okinawa expected to be served from Tokyo Narita and/or Osaka Kansai

Skymark Airlines launches Narita Shuttle services; JAL Express opens operating base at Haneda

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