Hokkaido International Airlines Co., the ailing carrier better known as Air Do, filed for court protection from creditors Tuesday after giving up on self-rehabilitation efforts, company officials said.
The regional carrier plans to rebuild itself by forming an alliance with All Nippon Airways Co., the officials said.
Air Do is the first new entrant in the domestic airline market to fail since modified regulations allowed new competitors to enter in the late 1990s.
The Sapporo-based carrier filed with the Tokyo District Court under the fast-track civil rehabilitation law.
Areas of possible cooperation between Air Do and ANA include code-sharing, space-sharing at ANA check-in counters, frequent flyer memberships, maintenance and crew training, the two companies said.
ANA has sought an alliance with Air Do in part to counter competition from Japan Airlines and Japan Air System, which will join forces in October.
The two companies will soon begin consultations with the Fair Trade Commission to obtain approval of code-sharing for domestic flights.
Air Do will draft a rehabilitation plan under the corporate revival law. Whether ANA will form capital tieup with Air Do will be decided during the drafting process, a ANA spokesman said.
Air Do’s liabilities exceeded assets by 303 million yen at the end of March.
Meanwhile, the daily operations of Air Do’s six Sapporo-Haneda flights will continue as usual, the airline said.
Air Do was set up by Hokkaido-based shareholders in 1995 and started operations in 1998. The airline attracted attention by slashing airfares to Hokkaido to 16,000 yen upon its debut, which was about 40 percent lower than what the three major airlines — Japan Airlines Co., All Nippon Airways Co. and Japan Air System Co. — were offering.
A price war, however, sent the upstart airline into a financial tailspin that became apparent in late 2000. Air Do posted accumulated losses of 7.5 billion yen in the latest business year. Air Do also suffered from other disadvantages, such as check-in counters in inconvenient locations, a lack of boarding bridges and high initial costs for pilot and crew training.
In April the transport ministry revised its industrial air policies to nurture new carriers by giving them more slots at crowded airports and urging major airlines to give away check-in counters and boarding bridges.
But the new measures, to be implemented in the fall, were too late to save Air Do.
The Hokkaido Prefectural Government has extended loans totaling 4.5 billion yen to save “the wing of Hokkaido,” but the airline has been tardy in paying about 1.35 billion yen in landing fees and airport-use charges to the central government.
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