Japan Airlines to establish low-cost carrier

Japan Airlines to establish low-cost carrier

Japan Airlines Co Ltd (JAL) has said on Monday it is launching a low-cost carrier, offering medium to long-haul flights.

The new airline which aims to tap growing Asian demand for budget air travel, will be based at Narita International Airport and offer flights to Asia, Europe and the Americas, JAL said in a statement.

The as-yet unnamed airline plans to start flying in the summer of 2020 with two wide-body Boeing 787-8 aircraft.

JAL will invest ¥10 billion to ¥20 billion ($91.44 million to $182.88 million) in the business, with the aim of reaching profitability within three years from the launch, the company said.

Budget flights have been slow to take off in Japan, which is dominated by full-service carriers JAL and ANA Holdings Inc and has a sophisticated high-speed rail network, but with growing numbers of Asia travelers taking to the air the two Japanese airlines are looking to expand their low-cost offerings.

“Full-service airlines typically have high costs, but in Japan this is especially so,” said Will Horton, senior analyst at research consultancy CAPA Center for Aviation. “Japan needs new platforms to capture foreign visitors. They are not like the Japanese who are sticky in wanting to fly a costly Japanese full-service airline.”

ANA has said it will launch medium-length international flights, potentially flying as far afield as India, as it integrates its low-cost carrier units under the Peach brand name.

JAL, by contrast, holds only a minority stake in Jetstar Japan, a joint venture with Qantas Airways Ltd’s low-cost brand Jetstar which flies narrow-body aircraft. JAL said it would continue to invest in Jetstar Japan.

The new long-distance carrier is a totally different proposition from Jetstar Japan, which “is purely short-distance. Jetstar Japan has given its approval for the move,” JAL’s new President,Yuji Akasaka told reporters.

Jetstar Japan said in a statement that the new airline would be complementary because it would bring more international visitors to Japan who would then travel on its domestic network.

“We are in discussions with JAL about opportunities for Jetstar Japan and the new low-cost carrier to work closely together,” Jetstar Japan said.

JAL said it plans to have outside investors in its new low-cost carrier which will be a consolidated subsidiary.

Other players are also looking to take advantage of Japan’s growing status as a tourist destination, with AirAsia Japan having relaunched and airlines such as Hong Kong Express and Singapore’s Scoot adding flights to Japan.

Agency Report