Spring Airlines looks for Japanese JV partner

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Chinese low-cost carrier Spring Airlines is seeking a joint venture (JV) partner to set up an airline in Japan.

The JV Spring Japan is poised to launch in 2013, a year after Australia's Jetstar and Malaysia's AirAsia set up their JV with Japan Airlines and All Nippon Airways (ANA), respectively, in Tokyo. ANA is also starting up Peach Aviation, a JV with Hong Kong investors that will be based in Osaka's Kansai airport.

Japanese law states that any new airline must be majority owned by a domestic player. Spring is in talks with a number of Japanese companies, with a view to forming an alliance, said its new CFO, Johnny Lau.

There should be "synergies such as shared relationship networks, assets, expertise and money" with the partner, he added. "Japan's aviation market is well-established and we have plenty of choice from banks, airports, trading houses, leasing companies and players on the supply side," said Lau.

Spring is unlikely to team up with a local airline, said Lau, who is mindful about the potential route conflicts that could bring.

The group is also scouting for Spring Japan's first five narrowbody aircraft, which will be financed through operating leases.

"We are still deciding whether to go for Boeing 737s or Airbus A320s," said Lau.

He also dismissed Jetstar executive director Vincent Hodder's remarks on the second day of Ascend's Aviation Finance Forum in Tokyo that only the "first one or two market entrants will get scale and the others will fall by the wayside".

"Japan has huge market potential," said Lau. He is confident that the business Spring brings from China to Japan via its travel agent parent company will help guarantee the success of its Japanese venture. Spring has regular flights from Shanghai to Japan's Ibaraki Airport.

Spring is China's only low-cost carrier and has a fleet of 25 A320s, with an average life of 4.4 years. It is planning to be listed on the Shanghai Stock Exchange next year.