Faced with a warning from the Fair Trade Commission, All Nippon Airways Co. said Thursday that it will withdraw its plans to offer new discount fares for flights between Tokyo and the three Kyushu airports of Fukuoka, Miyazaki and Kagoshima.
The antimonopoly watchdog had warned the nation’s three major airlines — ANA, Japan Airlines Co. and Japan Air System Co. — that their fare-slashing strategies could violate the Antimonopoly Law by exploiting their oligopolistic positions against smaller newcomers.
At present, two entrant carriers link Tokyo and Kyushu offering budget fares — Skymark Airlines Co., which began operations in 1996, and Skynet Asia Airways Co., which was launched in August.
The three major carriers have set discount fares on routes between Tokyo’s Haneda airport and the Kyushu airports in a bid to match the low prices offered by Skymark and Skynet Asia.
ANA officials said that while they believe the carrier’s discount rates do not run counter to the Antimonopoly Law, the carrier will “take seriously” the FTC stance and will revise its fares for the three routes.
The discounts were slated to begin in December.
As a result, ANA’s December discount rates will remain at the same level as those of last year: 20,000 yen for the Haneda-Fukuoka route, 22,000 yen for Haneda-Miyazaki and 23,500 yen for the trip between Haneda and Kagoshima.
For November, ANA had set discount rates of 18,000 yen for Haneda-Fukuoka, 18,500 yen for Haneda-Miyazaki and 19,500 yen for Haneda-Kagoshima.
The FTC noted that the three major airlines had reduced their fares only for routes in which they must compete with the new entrants.
For November and December, Skymark has set a regular airfare of 18,000 yen for its Haneda-Fukuoka flights, and 19,500 yen for its Haneda-Kagoshima route. Passengers who fly on Tuesdays and Thursdays may be eligible for additional discounts.
Meanwhile, Skynet Asia has set a regular airfare of 21,000 yen for its Haneda-Miyazaki flights in November.
“Problems concerning ANA will be cleared up for the time being, but we will continue to closely watch the situation to ensure the new entrants are not unfairly excluded,” the commission said in a statement released Thursday in which it outlined its concerns regarding the pricing policies on the three routes in question.
JAL and JAS — which will integrate their business operations under a holding firm in October — had no immediate response to the FTC’s warning as of Thursday afternoon, but industry observers said they are widely expected to follow ANA’s move.
Authorities are on the lookout for excessive price-cutting by larger carriers that could nip fledgling airlines in the bud, especially after Hokkaido International Airlines, better known as Air Do, filed for insolvency proceedings in June after succumbing to aggressive discount policies by the major airlines.
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