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Europe-Japan airline market: anti-competitive JV concerns as 81% of capacity held by three groups

There are growing concerns that the market between Europe and Japan has become too concentrated, pushing up air fares and decreasing growth. Of Europe-Japan nonstop seat capacity, 81% is held by three entities: a Star Alliance-centric JV, a oneworld-centric JV, and Air France-KLM – without a JV, but a dominant entity in their own right.

In comparison, the trans-Atlantic market operates with 75% of capacity under JV control and with growing disruption from a combination of national airlines, LCCs and next-generation narrowbodies pushing down JV market share. The Star Alliance-centric Europe-Japan JV has cut capacity, while the oneworld-centric JV is finally expanding.

There is a higher than normal preference from the Japanese market for short journey times. Although this means the market excludes third country options that other markets might accept, many third country routings through other Asian hubs or the Middle East are significantly longer, reducing reasonability.

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