/

ANA may end tieup in bid to turn LCC AirAsia Japan unit around

Bloomberg

ANA Holdings Inc., which owns a majority stake in a Japanese discount carrier set up in partnership with Malaysia-based AirAsia Bhd., said it is considering dissolving the tieup as it aims to improve sales of the domestic-based low-cost airline.

Ending the partnership in the AirAsia Japan Co. venture is one option and no final decision has been made, Megumi Tezuka, a spokeswoman for Tokyo-based ANA, said Monday. AirAsia Group chief Executive Officer Tony Fernandes said by email that he would comment “in due course.”

ANA would continue operating the low-cost carrier from Narita airport even if the partnership with Malaysia’s AirAsia is dissolved, Tezuka said. AirAsia Japan has struggled to fill seats in the face of stiff competition from other LCCs, including Peach Aviation Ltd., which is also partly owned by ANA, and Jetstar Japan Co., which also began flights in Japan last year. Japan Airlines and Australian carrier Qantas both have a stake in Australia-based Jetstar.

“ANA should be able to turn (AirAsia Japan) around,” said Ryota Himeno, an analyst at Barclays Securities Japan Ltd. “They’ve already shown they can be successful with Peach. AirAsia may have discovered the difficulties of flying from Narita” instead of Haneda airport, which is closer to downtown Tokyo, he said.

The Nikkei newspaper reported earlier Monday that ANA will acquire AirAsia’s stake in AirAsia Japan, without saying where it got the information.

Tezuka meanwhile said that ANA, which owns 67 percent of AirAsia Japan, may buy out AirAsia’s stake in the venture.

Narita, Chiba Prefecture-based AirAsia Japan filled 67.6 percent of the seats on its domestic flights during the Golden Week holiday from April 26 to May 6, the carrier said in a statement last month. Peach, which flies from Kansai airport in Osaka, said it filled 91.3 percent of its domestic seats.

Jetstar Japan, which only flies within the country and is also based at Narita, filled 78.8 percent of its seats, according to the company.

ANA has said it aims to fill 80 percent or more of its seats on low-cost carrier operations.

AirAsia Japan, which began operations in August, has five domestic routes and also flies to Seoul and Busan, South Korea. The carrier will add flights to Taiwan next month and is considering another overseas flight before the end of next March as it more than doubles its fleet to nine planes from four, Yoshinori Odagiri, chief executive officer of the carrier, said last week.