Mitsubishi, others eye launching regional airline
TOKYO -- Mitsubishi Corp., Mitsubishi Heavy Industries and partners are looking to create a regional airline that operates flights on behalf of major carriers and businesses, moving to tap growing demand from Asian travelers to Japan and revive regional airports.
The companies have launched a committee to study the feasibility of this project. The Mitsubishi Heavy unit that developed the Mitsubishi Regional Jet will join the dialogue with Japan Tourism Marketing, the Development Bank of Japan, and scholars from the University of Tokyo. The panel will also reach out to Japan Airlines and All Nippon Airways.
The planned venture would operate short-distance flights for JAL and ANA. It will also encourage regional companies, financial institutions and governments to create new businesses focused on ticket sales, with the new carrier operating the flights.
The airline will use the MRJ, Japan's first domestically built jet. The 70- to 90-passenger aircraft will be about 20% more fuel-efficient than existing planes of similar size.
The goal is to make the venture a reality by the first planned delivery of the MRJ in 2017. Once the business builds up a fleet of 100 or so planes, it is expected to rake in around 100 billion yen ($951 million) in sales a year.
Operating a route between Fukushima Airport and Shanghai will likely cost the carrier about 1 billion yen a year. This translates to about 30,000 yen to 40,000 yen a ticket -- much cheaper and faster than taking a train from Fukushima to Tokyo and catching a flight there.
SkyWest Airlines has a similar business model in the U.S., flying to regional cities for Delta Air Lines and American Airlines.
But current aviation laws in Japan do not allow for separate entities to undertake the operation of flights and ticket sales. Mitsubishi and other committee members will urge the authorities to revise the regulations.
Major carriers working with the new venture could save on fixed costs for regional routes with limited demand. The new company, for its part, would be guaranteed stable earnings from commissions and fuel fees from its partners, regardless of the actual number of passengers.
Domestic fliers increased 7.7% in fiscal 2013 to 92.6 million, according to the transport ministry. But regional routes have suffered from the shrinking and aging population.
Japan aims to double foreign visitors to the country by the 2020 Tokyo Olympics, and the main international airports of Haneda and Narita may not be able to accommodate them all. If the new airline can connect regional airports with the rest of Asia, it would encourage tourists to visit places off the beaten track as well.