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AirAsia to up overseas flights to offset weaker yen

Bloomberg

AirAsia Japan Co., one of the three Japanese low-cost carriers that started last year, is adding more overseas flights to increase foreign currency revenue to offset a rise in fuel and lease costs caused by a weaker yen.

“We’re trying to balance the increase in costs with more inbound flights from overseas,” AirAsia Japan CEO Yoshinori Odagiri said Wednesday.

AirAsia Japan, which flies from Tokyo’s Narita and Nagoya’s Chubu airports, will start daily flights to Taiwan next month and is considering adding another overseas service before the end of March, Odagiri said.

The yen has slid 17 percent in the past six months against the dollar, driving up expenses for Japanese carriers as jet fuel and lease charges are priced in dollars.

“The benefit of adding international flights is that it’s a natural way to hedge costs,” Ryota Himeno, an analyst at Barclays Securities Japan Ltd. “Japan low-cost carriers are still getting started and so there’s still plenty of room for them to expand capacity.”

AirAsia Japan, a venture between AirAsia Bhd. and ANA Holdings Inc., aims to be profitable in the fiscal year that starts next April 1, Odagiri said.

The airline will expand its fleet to nine planes from four by the end of March, he said.

The carrier, which has five domestic flights, will start Taiwan flights from Narita on July 3. Its current overseas services are to Seoul and Busan, South Korea.

The airline began operations in August, following the start of services by discount carriers Peach Aviation Ltd. and Jetstar Japan Co. AirAsia Japan offers fares less than half the price of Japan Airlines Co. and ANA.

AirAsia Japan gets about 40 percent of its sales on international flights from overseas customers and the rest from passengers from Japan, Odagiri said. The carrier has tied up with travel agents in Taiwan to sell packages that include its flights, he said.

AirAsia, based in Sepang Selangor, Malaysia, holds 33 percent of AirAsia Japan, with ANA owning the balance. ANA also has a stake in Peach. Jetstar Japan’s shareholders include JAL and Qantas Airways Ltd.