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Business

Japanese budget carriers look to Asia as tourism surges

Vanilla Air and Jetstar Japan are adding international service to make better use of idle periods.

TOKYO -- With competition on domestic routes eating into passenger traffic, Japanese low-cost carriers are shifting focus to the rest of Asia to capitalize on brisk inbound tourism.

     Jetstar Japan, a Japan Airlines affiliate, debuted service between Manila and Narita Airport on Tuesday, becoming the first Japanese budget carrier to fly to the Philippine capital. CEO Gerry Turner touted the business opportunity from traffic between Japan and Manila during an event at the Tokyo-area airport to mark the occasion.

     The carrier will offer flights to Manila from Chubu Airport near Nagoya and the Osaka-area Kansai Airport starting in April. The Philippine city is Jetstar's third international destination, after Taipei and Hong Kong. The airline is considering launching service to mainland China next fiscal year.

     Tourism from the Philippines has soared with the relaxed visa requirements, growing 46% to roughly 270,000 visitors in 2015. Jetstar aims to tap this demand with low fares. One-way economy class tickets between Narita and Manila start at 9,000 yen ($79.60), less than half the price at major airlines.

     Jetstar boasts the largest domestic network among Japan's four low-cost carriers, serving 11 airports including New Chitose Airport in Hokkaido and Naha Airport in Okinawa. But the airline has been bleeding red ink, forcing it to drop domestic routes for the first time last fall.

     Narita does not allow flights between 11 p.m. and 6 a.m., which has limited Jetstar's capacity utilization. The carrier's new flight to Manila departs Narita in 8 p.m. hour and returns in the 6 a.m. hour the next morning. Jetstar's fleet of 20 planes will operate near full capacity, Turner said.

     Budget carrier Vanilla Air's flights between Narita and Taipei operate on a similar schedule, leaving Japan at night and returning in the morning. But planes are forced to sit on the tarmac in Taiwan for some time due to the Japanese airport's restrictions on flight times. The ANA Holdings unit will start flights between Taipei and Kansai Airport in this previously idle period, for a total of two round trips between Japan and Taipei in one night.

     Spring Airlines Japan, an affiliate of China's Spring Airlines, dropped service last fall between Narita and Takamatsu Airport in Kagawa Prefecture, one of its three Japanese domestic routes. The carrier began flights between Narita and the Chinese cities of Chongqing and Wuhan in February.

     The proliferation of low-cost carriers throughout Asia makes for tough competition. New companies have cropped up, such as a joint venture between a Singapore Airlines unit and Thailand's Nok Air, further crowding the field. Some airlines plan to begin service to Japan, eyeing the upswing in tourism.

     Asian budget carriers based outside Japan benefit from lower labor costs than their Japanese counterparts. Japanese companies will need to offer better service or operate more efficiently to compete effectively.

(Nikkei)

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