Venture Republic CEO and co-founder Kei Shibata, speaking at CAPA's LCCs & New Age Airlines in North Asia conference in Macau, predicted (05-Sep-2012) the LCC penetration rate in Japan will reach 50% within five years. At below 10%, Japan currently has one of the lowest LCC penetration rates in the world but the market has seen this year the start of what Mr Shibata sees as a long overdue revolution with the launch of three LCCs – Peach, Jetstar Japan and AirAsia Japan. "We have been suffering the last two decades but finally we see some light at the end of the long tunnel," Mr Shibata said, adding, "It's definitely changing peoples behaviour". Venture Republic owns and runs Japan's leading online travel search engine Travel.jp.
Japan's LCC penetration rate to reach 50% within five years: Venture Republic CEO
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The impact of the additional LCCs will be minimal in network size: Peach's four weekly Osaka-Shanghai flights are in addition to an existing 117 weekly flights. Over the long term there are strong opportunities for LCCs (as evidenced by the first mover Spring Airlines), but in the near future the greatest impact from additional LCCs will be in reminding Chinese full service airlines of alternative business models and their own need to reform. To a Chinese airline a Japanese LCC is almost paradoxical: an airline trying to be low cost in a high cost country with low population growth. Yet the relative success of Japanese LCCs provides a case study – and also market challenges.
Korea-Japan: LCCs are poised to overtake full service airlines for first time in Northeast Asia
For the first time in Northeast Asian aviation, low cost airlines are poised to overtake full service airlines in a significant way. The market concerned is that between Japan and Korea, where LCCs are rapidly growing, while full service airlines are decreasing capacity. Overall market size and visitor figures are at record highs. This refutes any legacy airline thinking that LCCs "steal" market share; LCCs are growing the market and becoming the future – as they already are in other parts in the world.
LCCs accounted for 1% of available seats between Japan and Korea in 2009, reached 37% in 2016, and so far in 2017 will account for 49% of the market. Limited airport data indicates that LCCs, operating at higher load factors, already transport more passengers than full service airlines, and by the end of 2017 LCCs should easily account for the majority of capacity.
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