Business / Corporate

Japan Airlines may set up budget carrier, vice chairwoman says

by Kyunghee Park and Kiyotaka Matsuda

Bloomberg

Japan Airlines Co. is examining setting up a new low cost carrier to increase capacity and take on rising competition from budget operators.

Starting a discount airline is part of the carrier’s need to widen its product lineup, Vice Chairwoman Junko Okawa, 63, said in an interview in Singapore on Monday. It is one of several options the company is exploring, she said, adding no decision has been taken yet.

JAL is already a shareholder in low fare carrier Jetstar Japan Co.

Asia’s budget airline revolution has been slow to sweep Japan, a market that JAL and its bigger rival ANA Holdings Inc. have dominated for decades.

Aided by a tourism boom, low cost carriers such as AirAsia, Jetstar Japan and Peach Aviation have in recent years tried to wean passengers away from legacy operators in a country where bullet trains offer stiff competition to planes on internal routes.

“JAL has been focusing on premium full service so far, but as the popularity of LCCs spreads far and wide in the region, it is natural for companies like JAL to expand their lineup to low price,” said Kyouko Amemiya, a senior market adviser at SBI Securities Co. in Tokyo.

Foreign visitors to Japan rose 19 percent last year to a record 28.7 million, according to the Japan National Tourism Organization. The tourists were mainly from China, South Korea and Taiwan.

As part of its medium-term plan, Tokyo-based JAL is aiming to get 50 percent of its revenue from international passengers by 2020, up from 30 percent last year, Okawa said.

After emerging from the shadows of bankruptcy earlier this decade, the government ended its oversight last year, freeing the carrier to set its own expansion plans, revive the business and regain some of the market share ceded to ANA.

JAL is beefing up its fleet in preparation for the 2020 Summer Olympics and is trying to secure more takeoff and landing slots at Tokyo’s Haneda airport.

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