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Japan-Update

ANA targets expansion of budget flights across Asia

Japanese carrier aims to double sales in five years for Peach and Vanilla units

ANA Holdings unit Peach Aviation is expected to add more routes throughout Asia.

TOKYO -- ANA Holdings will expand flights by its budget carriers to capture growing demand from Asian visitors to Japan, focusing on Southeast Asia, even as competition in the low-cost field intensifies.

ANA released its five-year strategy through fiscal 2022 on Thursday, outlining plans to boost mid-distance budget routes across Asia, including India. The Japanese company aims to double sales for its low-cost carriers from an estimated 96 billion yen ($881 million) for the year ending in March to just under 200 billion yen in fiscal 2022.

"We see nine-hour, one-way flights in the future," Senior Vice President Koji Shibata told reporters Thursday.

Peach Aviation and Vanilla Air are ANA's two budget carrier units, while All Nippon Airways serves as the company's main airline.

"We want to use Peach and Vanilla to cover blank areas for All Nippon Airways," Shibata said.

Though Peach is expanding routes from its bases at Kansai Airport near Osaka and Naha Airport in Okinawa, flights remain limited to destinations like mainland China, South Korea and Taiwan. Peach has done little to tap demand from Southeast Asia aside from a Naha-to-Bangkok route.

Likewise, Vanilla operates some flights from Narita Airport near Tokyo to Mactan-Cebu International Airport in the Philippines, but little else for Southeast Asia.

ANA first will establish routes with the highest demand, likely for cities in Vietnam, Thailand, Indonesia and India. The company also plans to expand its LCC fleet by 20 planes to roughly 55 in fiscal 2022.

Demand for passenger flights in Asia is expected to grow more than 5% annually for the next 20 years. But budget carriers control about 60% of the Southeast Asian market, compared with around 10% in Japan.

Competition is heating up in the budget arena. Indonesia AirAsia X will commence flights from Narita to Jakarta in May, and Japan Airlines is partnering with budget carrier Vietjet Air.

ANA said Thursday that April-December sales jumped 12% on the year to 1.49 trillion yen while net profit spiked 77% to a record 152.9 billion yen. Earnings improved soundly as the company won over domestic and foreign flyers by expanding routes.

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