CAPA LCCs In North Asia

Jin Air is Korea's first dual-brand LCC. Cooperation with parent Korean Air has grown. Jin Air is also Northeast Asia's first widebody LCC operator. Jin Air will grow its all-Boeing fleet to 22 aircraft by July. Partnerships are growing as Jin Air expands its network.

Tigerair Taiwan is majority owned by Taiwan's China Airlines, which has also introduced a hand bag-only fare to compete in an increasingly price sensitive market. Tigerair Taiwan CEO Kwan Yue sees China Airlines targeting a different market with this fare. Tigerair Taiwan has grown extensively in Japan including Tokyo and Osaka but traffic rights restrict its growth in another key Northeast Asian city, Seoul. Southeast Asia is the next market for the airline's growth.

Keynote presentation from Japanese LCC Peach Aviation by Representative Director & CEO, Shinichi Inoue.

Keynote presentation from Japanese LCC Vanilla Air by Representative Director, Chairman, Tomonori Ishii.

LCC cooperation is growing in Asia, but Korea's Eastar Jet has been in the partnership arena for a while via a codeshare with T'way that dates back to 2013. In 2016 Eastar expects to carry 5.5m passengers on a fleet of 16 737s.

Spotlight on selected North Asian LCCs: Q&A with CAPA's Stephen Pearse Jeju Air, CEO, Ken Choi

HK Express continues to see more growth opportunities than infrastructure, slots and air service agreements permit. CEO Andrew Cowen discusses those challenges as well as market segmentation now that sister carrier Hong Kong Airlines will enter the Hong Kong-Tokyo and Hong Kong-Osaka markets, two of the largest routes for HK Express.

Peach Aviation was the first of a new wave of LCCs to enter the Japanese market in 2012. Peach offers domestic and international flights primarily from its Osaka Kansai hub. Peach flies as far south as Hong Kong and Taipei and is considering a base in Okinawa to be able to fly non-stop to Southeast Asia, a market it does not yet serve. Peach will have a fleet of all-A320s in FY2017 and is considering future growth plans.

Tokyo Narita airport is the home of three LCCs. Narita opened its low-cost facility, terminal 3, in Apr-2015 and has seen passenger throughput of 6m. With a design capacity of 7.5m, Narita is planning expansion. Narita in a few years has shifted from an international, full-service airport to one with significant low-cost and domestic flights. Narita is looking to enhance its hub status and to grow transfer traffic, mainly along the North America-Asia connecting corridor.

Osaka Kansai was the first airport to be privatised in Japan. Airport ownership was transferred with high momentum as Kansai posted 20% growth on the back of strong inbound demand for tourism. Kansai in 2012 opened Japan's first low-cost terminal and in early 2017 will conclude an expansion on terminal two to have dedicated space for domestic and international low-cost flights. Growth comes with pressure on infrastructure and Kansai is working with Japanese authorities and UK-based NATS to improve air space.

Spotlight on selected North Asian LCCs: Q&A with CAPA’s Stephen Pearse Spring Airlines, President, Stephen Wang  

Vanilla Air is looking to expand its presence in Taiwan, including with fifth freedom flights to Southeast Asia. Vanilla Air has upwards of six flights a day between Japan and Taiwan. Vanilla is still studying options to serve mainland China. Vanilla was one of the founding members of the Value Alliance, which it sees as a distribution alliance.

Jetstar Japan has started international flights to Hong Kong, Taipei and Manila. Some of the flights are overnight services and help improve Jetstar Japan's aircraft utilisation rate. Jetstar is remaining focused on its A320 operation but could reach other international markets via a new base in Japan or another country.

T'way is Korea's youngest LCC. It operates an all-737 fleet of 14 aircraft on four domestic routes and 22 regular international routes. Some routes have codeshares with another smaller Korean LCC, Eastar. T'way sees this as a way to boost its market presence. T'way plans to add three to four new aircraft a year.

Japan will soon have five LCCs that have been launched since 2012. Can they all find a niche? Many are part of dual-brand strategies with a parent airline. What is the role, opportunity and challenge of the group? They are increasingly growing faster in the international market. Are foreign passengers more receptive to LCCs? How long until the domestic Japanese market embraces LCCs? What is the impact of the LCCs on the full-service airlines and Japan's "new entrant" airlines? Moderator: Tokyo Institute of Technology, Associate Professor, Shinya Hanaoka Panel Members:

• Amadeus IT Group, VP, Japan, Airline Group, Asia Pacific, Cyril Tetaz
• Jetstar Japan, Chairman and Representative Director, Masaru Kataoka
• Peach Aviation, COO, Takeaki Mori
• Spring Airlines Japan, Chairman, Wang Wei
• Vanilla Air, Deputy Director, Mio Yamamuro

Southeast Asia is a leader in the modern long-haul, low-cost airline but Northeast Asia has only one long-haul LCC. Will there be others? What are the opportunities for long-haul, low-cost airlines flying to Northeast Asia? There are existing services to Southeast Asia and Australia – are Europe and the US too far and competitive? Demand and opportunity are not the same. What constraints – slots, traffic rights – do foreign LCCs face in Northeast Asia? Moderator: McKinsey & Company, Partner, Steve Saxon Panel Members:

• AirAsia, Group Head of Risk, Attila Emam
• Cebu Pacific, Former Chief Executive Advisor, Garry Kingshott
• Experienced Airline Executive, Sandeep Bahl
• Spring Airlines, Social Media Director, Jonathan Hutt
• VietJet, Board Member, Chu Viet Cuong

Korean LCCs have largely focused on domestic flights to/from Jeju. Now that Jeju Airport is slot constrained, what is the growth outlook. Is it better to be an independent LCC or have a parent airline owner (part/full)? Are Koreans different? Will they not accept a Southeast Asia, Japanese-style LCC? Moderator: Embry-Riddle Aeronautical University-Asia, Adjunct Assistant Professor, June Lee Panel Members:

• Air Busan, Executive Vice President, Choi Pan-ho
• Eastar Jet, President & CEO, Kim Jung Shik
• Jin Air, Senior Vice President / Director of Marketing & PR, Emily Cho
• T'way Air, Vice President of Business & Management Division, Kim Hyung-Yi