Japan seen as the year's main battle ground for Boeing and Airbus as ANA and JAL discuss several orders

All Nippon Airways (ANA) is closing on a major narrowbody aircraft order in what is expected to be the first in a series of key deals in the Japanese market this year.

Airbus and Boeing have been fighting for the order since late 2002, when ANA issued a request for proposals for aircraft seating more than 110 passengers. A deal is now considered imminent for anywhere between 25 and 50 aircraft, for both replacement and growth, for delivery from early in 2005.

ANA is also expected to order extra aircraft later this year from either Airbus or Boeing, as well as Bombardier or Embraer. Rival Japan Airlines (JAL) is likely to do the same, possibly with orders for 70 and perhaps even more single-aisle aircraft, says industry sources. The sources say ANA has told Airbus and Boeing to expect an decision around the end of March, although this could be pushed back to April.

ANA is also considering an order for large regional jets. Embraer in particular has taken an aggressive stance, and is hopeful it can secure a deal for 10-15 70-seat Embraer 170s.

The sources say, however, that ANA may defer regional jet order plans for now, partly because the Embraer offering has not been certificated. Bombardier is also fighting for a win with ANA in a bid to maintain its dominance in Japan.

Industry observers see Japan as this year's main battleground for the manufacturers as aircraft deals could lead to major shifts in market share. Airbus has only 20% of Japan's market and it is being highly aggressive with ANA, offering A320-family aircraft to replace Boeing 737-500s in service with subsidiary Air Nippon as well as to replace early-build A320s in its mainline domestic operation.

The sources say Airbus has been trying to convince ANA to link its narrowbody decision with orders for larger aircraft and has been pushing its ultra-large A380, which has had no Japanese sales. ANA is thought to have resisted this, preferring to focus on domestic operations. The narrowbody aircraft it is expected to order are likely to be put into a new low-cost carrier it plans to establish late next year, the sources add.

Boeing is offering 737s to ANA and is hoping a deal will lead to the carrier disposing of its A320s. Airbus is favourite in the ANA narrowbody competition, however, while Boeing is tipped for the JAL order. The airline has never ordered any Airbus aircraft.

Source: Flight International