As ANA's LCCs Peach & Vanilla merge, Qantas and JAL need to align strategy

In the early history of dual brand strategies in Asia airlines often took only a minority stake in an LCC. This half way house has proven strategically weak, since the lack of full ownership and control prevented the parent airline from using its LCC for strategic, integrated purposes. That was also at a time when conservative minds at the big two Japanese airlines were not fully convinced of the future for LCCs.

From a similar background, Singapore Airlines eventually paid dearly to take full control of Tigerair, and now All Nippon Airways will again pay a premium to increase its stake in Peach Aviation. All up, ANA is spending USD400 million, which values Peach at USD1 billion, but ANA may need to pay a further USD300 million for full control.

LCC subsidiary history also includes nuanced chapters where multiple brands, often overlapping, prevailed. As Japan's LCC market becomes more dynamic, with existing and forthcoming local and foreign operators, ANA is putting its house in order to compete more effectively.

Peach will take over the 100% ANA-owned LCC Vanilla Air. Peach will logically be the surviving brand from the merger, which is to be completed in 2019. That is a relatively quick time frame, given the Japanese market, but underscores the strategic urgency after such a long wait while ANA negotiated with Peach's other two shareholders. 

This CAPA Premium Analysis article is 1,996 words.

To access CAPA Premium Analysis you need a CAPA Membership

Your window into the latest insights

CAPA employs an industry-leading Analyst team based in Europe, North America, Asia and Australia who offer unique perspectives and independent and accurate commentary of critical industry developments globally. CAPA Members rely on our Analysis to unlock valuable insights and actionable intelligence to keep ahead of the game.

Big picture strategic view

Our Analysts don’t just report the news - they take a big picture strategic view of aviation dynamics, issues and trends and analyse the implications of these developments for you.

Global intelligence

The CAPA Analyst team is based globally to ensure our CAPA Members have access to independent, unique perspectives covering an entire spectrum of daily, worldwide commercial aviation developments.

Customise your Alerts

CAPA Members can use CAPA Alerts to receive daily, weekly or monthly and customised updates on our Analysis.

I'm very impressed by the factual and detailed analysis CAPA is always doing.

- CEO, Airline Member
To learn more, contact us:
Phone: +61 2 9241 3200 | Email: membership@centreforaviation.com