Low-cost carriers Peach and Vanilla to merge in 2019: ANA

Passengers use Peach Aviation's check-in machines at Narita airport in July 2014. ANA on Thursday said it plans to combine Peach and fellow low-cost carrier Vanilla Air by fiscal 2020. | REUTERS

by Cory Baird

Staff Writer

Vanilla Air and Peach Aviation, two low-cost carriers owned by ANA Holdings, announced on Thursday plans to merge by the end of fiscal 2019.

As of fiscal 2016, the two combined represented over fifty percent of the seats filled by Japanese LCCs, making the merger a significant consolidation for the discount market.

“We have been considering combining the companies for some time, but why combine now? First, both companies’ performance is healthy, and one more thing is that foreign travel to Japan is on a strong upward trend,” said ANA Holdings President Shinya Katanozaka at a news conference in Tokyo on Thursday.

Peach Aviation, operating out of Kansai International Airport, and Vanilla Air, operating out of Narita, are aiming to complete the merger by the end of fiscal 2019 and will begin preparing in the second half of fiscal 2018.

“In order to survive the fierce competition, we chose this option,” said Shinichi Inoue, CEO of Peach Aviation, who joined the news conference along with his new colleague Katsuya Goto, president of Vanilla Air.

Inoue also said there will be no loss of independence at the new company, which will continue to operate separately from All Nippon Airways.

“We already have our own company brand, and our customers are completely different than ANA’s. Around 60 percent of our customers are women, and people in their twenties and thirties are 65 percent of our business,” Inonue added.

As of July 2017 Vanilla Air had seven domestic and seven international routes, while Peach had 12 and 13, respectively, according to ANA.

Since Peach Aviation became the first LCC to begin operating in 2012, the discount market has expanded rapidly to include two other large competitors: Jetstar Japan, jointly owned by Japan Airlines and Australia’s Quantas, and AirAsia Japan, a unit of the Kuala Lumpur-based AirAsia group.

In February 2018 ANA Holdings released a new five-year growth strategy that uses its LCCs to “capture demand to/from the Asian market place, which is showing remarkable growth.”

According to the three speakers at Thursday’s news conference, plans to expand business to so-called medium-haul markets will move forward despite the merger.