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Business

AirAsia to take wing in Japan after long layover

Southeast Asia's largest budget carrier to offer Nagoya-Sapporo service

AirAsia Japan employees underwent training Friday at Chubu Centrair International Airport.

NAGOYA -- Low-cost carrier AirAsia Japan will ply this country's skies again as early as September, flying a domestic route from its home base of Chubu Airport near Nagoya, in a move likely to shake up the budget air travel market here.

The unit of Malaysia-based AirAsia, Southeast Asia's biggest low-cost carrier, will fly between Chubu and the city of Sapporo on Japan's northern island of Hokkaido. It plans to later offer flights from Chubu to Taipei as well, it had told affiliates by Friday.

Chubu Airport aims to open a terminal dedicated to low-cost carriers in the first half of fiscal 2019 in response to a spike in activity. A number of budget carriers operate through the airport, but AirAsia Japan will be the first to make it a base where planes are parked overnight and maintained.

Five airlines currently offer flights between Chubu and Sapporo, including Japan Airlines and low-cost carrier affiliate Jetstar Japan. Adding AirAsia to the mix may froth up price competition.

Low-cost carriers offer lower fares than traditional carriers by cutting costs and onboard services.

A turbulent history

AirAsia previously offered domestic Japanese flights via an earlier incarnation of its Japan arm, set up in 2011 through a joint investment with All Nippon Airways, which has since become a unit of ANA Holdings. But it withdrew from those routes in 2013 amid a disagreement with its partner. The joint venture became a fully owned unit of ANA Holdings that took to the clouds again under the moniker Vanilla Air.

Aiming to re-enter Japan's skyways, AirAsia partnered in 2014 with companies including e-commerce powerhouse Rakuten and sporting goods retailer Alpen to form the new AirAsia Japan, taking a 49% stake including nonvoting shares.

In 2015, that company moved its headquarters to Chubu Airport. At first, the carrier intended to start offering flights that year, but such issues as shortcomings in its safety management system forced a series of delays. A planned route between Chubu and the northeastern city of Sendai was nixed as well. A fourth, indefinite delay was announced in January.

AirAsia Japan's management also shifted during the delays. The company's first CEO, All Nippon Airways alum Yoshinori Odagiri, stepped down at the end of 2015. Thereafter, the unit courted Takashi Ide -- former chairman of low-cost carrier Skymark -- for a top management position, while Odagiri's seat was filled by Osamu Hata.

Flying for supremacy

Low-cost carriers ferried some 9.3 million passengers on domestic routes in fiscal 2016, according to Japan's transport ministry. That figure is roughly 3.5 times the headcount in fiscal 2012, when Japanese low-cost carriers got into full gear.

But natural selection continues to play out among the budget airliners. For Peach Aviation, now an ANA Holdings subsidiary, operating profit grew 2% to a record 6.3 billion yen ($56.8 million) in the fiscal year ended March 2017. By contrast, the Japan unit of China's Spring Airlines suffered an operating loss of 3.8 billion yen for the year through December 2016. Competition will likely grow stiffer still on fronts such as building route networks and improving service.

(Nikkei)

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