A Very Slow Rebound in Japanese Market

NRT QF 333.JPGA Qantas A330-300 at Narita last July. Starting this July Qantas’s SYD-NRT flights will be operated with B747-400s and A330-200s in lieu of A333s. (Photo: Author)

Qantas announced today it will add more seats to the Tokyo market. Qantas currently has a daily A330-300operation to Narita from Sydney. From 5 July a 2-class B747-400 willreplace the A330-300 Thursday-Tuesday and an A330-200 will operate on Wednesday departures from SYD. The move will add 1,256 seats aweek. Qantas’s thrice-weekly Perth-Narita B767 service is unchanged.

A Qantas statement says the move is to “meet increased demand”.

Earlier this year during JAL’s drawn-out decision of sticking with oneworld or switch to SkyTeam, there was much discussion if Qantas would add capacity to Japan in the event its oneworld partner switched alliances or cut back capacity. JAL stuck with oneworld and a JAL spokesman in Australia says the carrier will not make changes to its Australia services. “None whatsoever,” he said.

So Qantas’s move does not appear to be grounded in worries over JAL. Another explanation could be Qantas wants to re-deploy its more lean A330-300 (which currently flies SYD-NRT), and knows it can easily fill up a 2-class B747-400 with leisure traffic to Japan. Surprise, surprise the Qantas statement quotes CEO Alan Joyce saying: “The growth comes on the back of increased travel to Japan by Australians, particularly in the leisure and VFR (visiting family and friends) markets.” Qantas took the opportunity to announce a fare sale to Japan.

But if the increase really is due to Qantas expecting an increase in demand, the move should be seen as a rebound, not growth.

Even with Qantas’s increased capacity, the Australia-Japan market is still down 24% from 2008 levels. Some capacity number crunching courtesy of BITRE:

Aus Japan Seat Count 08 10PDF.jpgQantas had the biggest drop, cutting in 2009 54% of 2008′s capacity. JAL cut approximately 44% of seats in the same period. The difference with Qantas is that its low-cost subsidiary Jetstar picked up half of the drop, giving the Qantas Group (Qantas + Jetstar) only a 18% decline.

Given slot restrictions in Japan and the A330 being Jetstar’s largest aircraft, Qantas was the only outlet to increase capacity. It’s thus hard to judge if the Qantas Group expects future growth in passengers willing to pay for full-service–and vindicate its two-brand strategy–or if the group’s future is with Jetstar.

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