ANA may boost Lufthansa venture

by Chris Cooper and Kiyotaka Matsuda

Bloomberg

All Nippon Airways Co. may expand a venture with Germany’s Lufthansa after greater cooperation with partners helped the Japanese carrier double transfer passengers at Narita airport.

ANA may form tieups with Lufthansa units Swiss International Air Lines AG, Austrian Airlines AG and Brussels Airlines NV, ANA President Shinichiro Ito said in a March 2 interview.

The Tokyo-based airline began the Lufthansa venture in October after forming a similar accord with United Continental Holdings Inc. last April.

“We’ve had a big boost in passengers flying to Narita airport and changing planes” because of the two pacts, Ito said in Tokyo, adding that widening the Lufthansa agreement “is definitely a possibility.”

The carrier is the only operator of Boeing Co. 787 Dreamliners and may also start flights to Moscow using the aircraft as it expands international operations, improves its frequent flier program and updates lounges to attract more long-haul and business travelers, Ito said.

ANA is focusing on these markets in response to the threat posed by new budget airlines to lure passengers on domestic and short-haul international routes.

“About half of Japanese flying abroad use non-Japanese airlines, so there is a lot of room for ANA to expand its international business,” said Seigo Ando at Deutsche Bank AG. “Moscow is a good destination, as there are many potential passengers related to automakers and other kinds of companies going there from Japan for business.”

ANA is also focusing on full services to differentiate them from those offered by low-cost carriers, Ito said.

The airline is backing two of the new domestic low-cost carriers — Peach Aviation Ltd., which began flights last week, and AirAsia Japan Co., which will start services in August. Jetstar Japan Co., part-owned by Japan Airlines Corp. and Qantas Airways Ltd., will make its debut in July.

Under the ventures with United Continental and Lufthansa, ANA coordinates schedules with its partners and shares revenue. The pacts helped boost ANA’s transfers at Narita airport to about 100,000 in the fourth quarter of 2011, a 170 percent increase from a year earlier, according to spokeswoman Megumi Tezuka.

“A lot more passengers are using Narita as a hub to fly to China and other areas in Asia,” Ito said. “It’s not just business customers, but economy class as well.”

Lufthansa is focusing on fully implementing the bilateral agreement with ANA by April 1, spokesman Boris Ogursky said from Frankfurt. The agreement allows the possible entry of the carrier’s affiliate airlines, he said, adding that no decision has been taken on the matter yet.

ANA expects to boost sales 3.1 percent to ¥1.4 trillion in the year ending March 31. Profit will probably drop 14 percent to ¥20 billion amid higher fuel prices, the company said Jan. 31.

The airline received its first Dreamliner in September and is currently operating five of the planes. Boeing will deliver another 787 this month and 14 more in the year starting April 1. The airline has ordered a total of 55 Dreamliners, 10 more than JAL, as it works to grow international flights 22 percent in the next two years.

ANA plans to use the Dreamliners’ greater fuel efficiency to start services to cities that don’t have enough demand to support larger planes, including San Jose and Seattle. “There are lots of places we want to fly the 787,” Ito said. “It all depends on the pace at which we get the planes.”

The airline has also discussed Boeing’s planned 737 MAX, a single aisle aircraft that will compete with Airbus SAS A320neo, which is in development, Ito said. The carrier suggested that the new plane be designed to hold air-cargo containers, he said.

“When we’re flying the plane domestically, we can cope with it not being able to carry containers,” he said. “When we fly it overseas though, we want to be able to carry cargo.”

Ito said the airline, which operates 56 Boeing 737s, isn’t looking to buy more narrow-body planes at present. ANA has outstanding orders for 10 more of the current 737 model, according to Boeing’s website.