Low-cost airlines soaring in Japan
TOKYO -- A growing number of domestic and foreign budget airlines are entering the nascent Japanese market, with a total of 15 firms now promising easy, convenient travel to and from the rest of Asia.
Vanilla Air, a subsidiary of All Nippon Airways operator ANA Holdings, will begin service from its hub at Narita Airport on Friday. "By all means, we want to take advantage of demand from Asia," President Tomonori Ishii said.
Of the four destinations to be serviced by Vanilla Air by spring, two of them are Asian cities -- Taipei and Seoul. A one-way trip between Narita and Taipei will be priced starting at 10,000 yen ($95), far less than the usual 120,000 yen fare offered by larger carriers. The company is looking to tap the travel demand created by the economy recovery, as well as the rising ranks of Asian customers lured to Japan by the weak yen.
The company currently operates two planes, a number the company plans to raise to 10 by the end of 2015, and plans to put the additional planes in Asian cities where it expects heavy tourism demand. Peach Aviation, another low-cost airline in the ANA group, will set up a route between Kansai Airport and Kaohsiung, Taiwan, next month.
Budget carriers overseas are also adding service to Japan. Australia's Jetstar is reviving its Narita-Melbourne route for the first time in five and a half years. Philippine airline Cebu Pacific, which already offers service to Kansai Airport, is expanding to Chubu Airport and Narita.
In 2007, Jetstar was the only foreign low-cost carrier offering service in Japan. The country now has 12 jockeying for business alongside three domestic budget airlines. Low-cost carriers operate about 200 flights weekly at Narita and Kansai Airport combined, a 20% increase from a year earlier, according to winter flight planning data.
The companies still see more untapped demand. A little more than 4% of flights at Narita belong to low-cost airlines. This figure is less than 20% at Kansai Airport, which runs 24 hours a day. In contrast to Japan, where two giants have a stranglehold on the market, low-cost carriers account for more than 50% of flights in Southeast Asia and 30-40% in Europe and the U.S.
If steps are taken to help accommodate budget carriers, such as expanding landing slots at Haneda Airport, then even lagging Japan might be able to catch a tail wind.