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.