AirAsia believes LCC market in Japan underserved

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AirAsia is re-entering Japan a second time, because it believes the Japanese low-cost market is currently underserved.

Unscarred by a failed first attempt, the carrier says its aim is to bring low-cost travel to Japan, making it affordable for the average Japanese to travel both domestically and regionally.

AirAsia group chief Tony Fernandes says the carrier is “working hard” to obtain the necessary operational approvals, and targeting to launch by summer 2015. Once operational, it will have domestic services within Japan, and also launch services to countries in North East Asia such as South Korea, Taiwan and China.

“The presence of AirAsia Japan is to serve the highly lucrative travel market in Japan. The investors and AirAsia firmly believe that AirAsia Japan will be a success as the Japanese market possesses the necessary ingredients for growth such as the population’s strong propensity to travel, its high capital income coupled with deep and significant internet penetration,” says the carrier.

It adds that it is aware of the stiff competition it will be up against given the various low-cost players already operating in the market. A feasibility study conducted however forecasts that the joint venture will be “operationally feasible and commercially viable”.

The carrier also has the added advantage of the AirAsia brand being recognised in Japan, considering its previous joint venture with All Nippon Airways (ANA), as well as having AirAsia X flying to Japan since 2011.

AirAsia Japan, which will have an authorised capital of Y7 billion($69 million), is a joint venture with four Japanese firms – e-commerce provider Rakuten, Noevir Holdings, Alpen and Octave Infrastructure Fund. AirAsia will hold a 49% stake.

AirAsia’s joint low-cost venture with ANA was dissolved in June 2013 as the partners could not reconcile their differences in strategy. ANA has since rebranded the joint venture as Vanilla Air, making it a wholly-owned subsidiary.