• Kyodo

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Ansett Worldwide, an Australian aircraft leasing firm, has offered troubled Hokkaido International Airlines a reduction of about 30 percent in leasing fees for two aircraft, informed sources said Friday.

The Hokkaido airline, known popularly as Air Do, is expected to accept the offer, with the two firms likely to renew the leasing contract based on the new fees later this month, the sources said.

An Air Do spokesman declined comment, citing the firm’s legal obligation to keep the negotiations secret.

The sources said the fee reduction, expected to take effect this month, will trim Air Do’s costs by more than 1 billion yen for the year to next March 31.

This will enable the cash-strapped airline to avert a cash crisis in the April-June quarter, which is the carrier’s slowest season, they said.

Ansett has also offered to extend more than 200 million yen in loans to Air Do as soon as next month and to pay 50 million yen in compensation for Air Do’s lost earnings caused by a delay in refurbishing aircraft seats, the sources said.

Air Do launched a Tokyo-Sapporo service in 1998 with one-way fares of 16,000 yen, 36 percent lower than the regular prices rival airlines were then offering.

The number of passengers on Air Do flights plunged after the nation’s three major airlines slashed fares for the same route, a sequence of events that eventually forced Air Do to increase its fares in 2000.

Air Do has already received some 4.7 billion yen courtesy of municipalities in Hokkaido and the local business community since its financial troubles surfaced in late 2000.

But the Hokkaido legislature has said that no further tax funds can be spared to bail out the struggling airline.

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