Peach Aviation investor First Eastern Investment's chairman Victor Chu reportedly stated he wanted to open up mainland China routes from Kansai International Airport with Peach Aviation within three to five years (South China Morning Post/NNA Asia, 05/06-Aug-2011). He said the routes to China would include Beijing, Dalian and Shanghai. Mr Chu said that while Peach is a short-haul LCC, the newly created AirAsia Japan by ANA and AirAsia is a short and medium-route LCC and stressed that Peach had quite different features from AirAsia Japan. He however stated that he is concerned that AirAsia was opposing Peach entrance to Tokyo Narita International Airport at where AirAsia Japan will establish its base. He also commented that AirAsia Japan’s staff cost would be higher due to the labour issue, which did not affect Peach. He also stressed the advantage of Peach by saying it has a strong support from Kansai International Airport where it is based. Peach’s investors are ANA (33.4%) and FEI (33.3%) plus other Japanese investors (33.3%).
Peach Aviation investor wants China mainland routes
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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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