The Japanese population's response to low-cost travel has "far exceeded the expectations" of Jetstar Japan's management team.
The airline, a joint venture between Japan Airlines and Australia's Qantas Airways, began domestic Japanese operations out of Tokyo's Narita airport on 3 July 2012. The carrier has five Airbus A320s and will place its sixth and seventh aircraft at its second base, Osaka's Kansai airport, from which it will begin operations in October.
It is the second low-cost carrier to start operations in Japan after All Nippon Airways' subsidiary, Peach, which is based out of Kansai airport and started services in March. AirAsia Japan, a joint venture between ANA and Malaysia's AirAsia, began services out of Narita on 1 August.
All three have broken into a market that was long closed to low-cost travel, with northeast Asia also seen as a white spot for the segment because of its low penetration rates compared with Southeast Asia.
"In July and August, our load factors were around 86%. It went up to around 90% during the week-long summer holiday period," says Miyuki Suzuki, chief executive of Jetstar Japan.
"There was scepticism about whether the low-cost model would take off in Japan. There was a perception that the Japanese public wanted quality service and freebies and that they would not take to the low-cost carriers. That has not been the case. The take-up rate has far exceeded all of our expectations."
Peach has said that around 30% of its passengers had never flown before and Suzuki says the figure is broadly in line with what Jetstar Japan is seeing as well. The passenger profile is predominantly Japanese and consists mostly of those who travel for leisure, she adds.
"We are opening up new patterns. People are flying from Sapporo to Okinawa via Narita, even though they can do that flight directly on the full service carriers. Many passengers will fly direct if it is on business but if it is for a family holiday, for example, it is far cheaper to do it with us with one stop than on the full service carriers or on the fast trains," says Suzuki.
"The price is key. This is a country that has had two decades of recession. At our prices, it is possible to fly the family out for a holiday and that is what we are seeing. Other factors like safety and punctuality are important for the passengers as well and we have the Qantas brand behind us which helps with those. But at the end of the day, it is all about price."
Jetstar Japan's ancillary revenue is lower than that of international services on other Jetstar brands, with the Japanese consumer only now getting used to paying for these additional services. But there appears to be "little push back" despite passengers having to pay for options such as additional baggage, and consumers are gradually getting used to the business model, says Suzuki.