Staff writer While the entry of new airlines two years ago accelerated competition in the industry in Japan, fares are likely to drop further as full deregulation is introduced today. The revised Civil Aeronautics Law will eliminate regulations on domestic air fares. As a result, domestic airlines will be given a free hand in deciding their fares, routes and flight frequency. The government began to deregulate the Japanese aviation market in earnest in the early 1990s in an effort to revitalize the economy. However, the effective monopoly of All Nippon Airways, Japan Airlines and Japan Air System limited movements in air fares. Even when Skymark Airlines and Hokkaido International Airlines (Air Do) entered the market in 1998 with lower fares, the big three retaliated with discounts and maintained their practice of offering similar fares. But times have changed. Industry experts say domestic carriers must devise ways to improve efficiency at home before competing full throttle on the international scene. In anticipation of intensified competition at home due to the revisions, which were enacted last June, the three major airlines last week announced new fare systems for the April-June period. ANA, the largest domestic airline, is offering 10,000 yen tickets for flights to any destination on designated dates. ANA President Kichisaburo Nomura said the carrier formed the fare scheme based on a survey of 17,000 people conducted last year. Rival JAL, meanwhile, is introducing an early reservation discount applicable to certain flights. Customers who reserve 21 days before departure can buy tickets at up to 60 percent off current prices. A one-way ticket from Tokyo to Sapporo, for example, would cost just 9,900 yen — 48 percent off the usual price. JAS is offering discounts of around 60 percent for any flight taken on Mondays and Tuesdays. Reservations, however, must be made two months in advance. A one-way ticket for a Tokyo-Osaka flight, for example, will cost only 6,500 yen, compared with the present 16,250 yen. Although standard fares for the three airlines will rise about 15 percent under new fare schemes, discount tickets will be more readily available, airline officials They said they expect more than 95 percent of their passengers to shift to discount tickets, for a 15 percent to 25 percent rise over current passengers. The average ticket price per passenger will fall about 3 percent, they said. One major concern the airlines have with discount tickets is that total sales might fall. But ANA’s Nomura said he is hoping that discount fares will actually enlarge the domestic market. “I think deregulation of the flight market is a business opportunity,” he said. “We can increase sales by attracting more passengers with the discount tickets.” Skymark and Air Do, the new airlines that triggered the first round of air fare competition in 1998, are likely to respond to the major airlines’ moves with discounts of their own. Takako Yamada, a spokeswoman for Skymark, said her company will look at simplicity in discounting to compete with the big three. “The new fare systems set by the three major airlines are too complicated for consumers. Although our air fare policy is to offer one price for any flight, we may set simple discount fares to challenge the big three,” she said. A Transport Ministry official said authorities believe deregulation will benefit both consumers and airlines. “Consumers need to understand discount programs to make good use of various discount fares,” the official said. “And the airlines that address consumers’ needs precisely will be the ones to survive the severe competition.”
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