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JAL to make China-focused LCC a subsidiary, eyeing tourism return

Major Japanese carrier plans to put several billion yen in Spring Airlines Japan

JAL plans to make Spring Airlines Japan a consolidated subsidiary by the end of June. (Source photos by Masayuki Terazawa and Wakako Iguchi)

TOKYO -- Japan Airlines plans to make Spring Airlines Japan, a low-cost carrier partly funded by China's Spring Airlines, a consolidated subsidiary by the end of June, Nikkei has learned.

JAL, one of Japan's two major airlines along with All Nippon Airways, will make an additional investment of several billion yen (tens of millions of dollars) to acquire a majority stake in Spring Airlines Japan. It will strengthen ties with the LCC, which has a strong customer network in China, in anticipation of a recovery in demand for tourism and visits to acquaintances after the coronavirus pandemic.

Spring Airlines Japan, which operates out of the city of Narita, east of Tokyo, was established in 2012 with investment from China's Spring Airlines and other companies. JAL currently holds a small stake in it.

Based out of Narita International Airport, Spring Airlines Japan operates flights to three domestic airports: New Chitose Airport in Hokkaido, Hiroshima Airport and Saga Airport. It also operates flights to Chinese cities including Tianjin and Harbin. Its strength lies in the large customer base of Shanghai Spring International Travel Services, the parent company of Spring Airlines.

There is a growing prospect that business demand will shrink in the airline industry as online meetings have taken root in the corporate sector during the pandemic. The main business of LCCs, however, is tourism and their importance is thus increasing on a relative basis.

The plan by JAL to raise its stake in Spring Airlines Japan comes as airlines are working to strengthen their LCC businesses in anticipation of a post-pandemic recovery in demand for tourism.

JAL began operating Zip Air Tokyo, an international LCC that flies to South Korea and Hawaii, last year. ANA Holdings is also expanding the flight network of Peach Aviation and plans to launch a new brand for low-cost international flights to Asia and other regions by fiscal year 2022.

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