ANA and AirAsia agree to dissolve joint venture in Japan

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Japan's ANA Holdings will buy out Malaysian carrier AirAsia's 49% stake in low-cost carrier AirAsia Japan after the two parties agreed to terminate their joint venture.

"ANA Holdings will acquire AirAsia Berhad's shareholding in the joint venture, which will henceforth operate as a wholly-owned subsidiary of ANA, based at Narita Airport," the company said in a statement.

AirAsia says that ANA will pay the carrier Y2.45 billion ($25.1 million) to buy out its shares in the joint venture airline, which represents 49% of the voting capital and 33% of the total capitalisation. The airline will continue to operate under the AirAsia brand until 31 October.

AirAsia adds the airline will return the four Airbus A320s that it leases from AirAsia by 1 November.

A spokeswoman for ANA told Flightglobal Pro that the airline will assume a new brand on the same day, with an announcement to take place in late July.

She could not confirm, however, if the airline would be merged with ANA's other LCC, Osaka Kansai-based Peach Aviation.

The announcement comes only two weeks after AirAsia raised the prospect of dissolving its partnership with ANA in a statement to the Malaysian stock exchange in which it noted that the two parties were working to resolve a number of issues with the carrier, which had not been performing as well as they had hoped.

In their most recent announcements, both AirAsia and ANA pointed to a series of irreconcilable issues over how to adapt the AirAsia model for the Japanese market.

"Issues stemmed from a fundamental difference of opinion between its shareholders on how the business should be managed from cost management to where the domestic business operations should be based," AirAsia says.

The ANA spokesman adds that the airline "failed to adapt to Japanese customers and way of sales".

"I have great respect for ANA as the leading legacy airline in Japan but it is time for us to part ways and focus our attention on what we do best, which is running a true LCC," says AirAsia group chief executive Tony Fernandes.

However, Fernandes indicated that AirAsia may look to re-enter the Japanese market under a new joint venture in future.

"I remain positive on the Japanese market and believe there is tremendous opportunity for an LCC to succeed, as proven by the tremendous success AirAsia X has seen," he says.

Innovata schedules show that AirAsia X flies daily to Tokyo Haneda International Airport, and four times weekly to Osaka Kansai International Airport. AirAsia adds that these services will not be affected by the dissolution of the joint venture.

AirAsia Japan launched domestic services from Tokyo Narita in August last year, and has expanded domestically and internationally to Taipei, Busan and Seoul. It also has a secondary base at Nagoya.