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Tuesday, December 18, 2007 7:02 pm

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A Viva Macau airplane at Narita International Airport. The low-cost carrier flies twice weekly from Tokyo to Macau.

Photo: Takayuki Saito. Creative Commons

Low-cost airlines making their way to Japan

Viva Macau’s first plane arrived at Narita International Airport east of Tokyo at 7:30 p.m. Saturday – only to head back to Macau one and a half hours later, marking the quiet entrance of the Chinese low-cost carrier (LCC) into the Japanese market.

While low-cost carriers (LCC), also known as no-frills airlines, have since long been successfully operating throughout the U.S., Europe, and southern Asia, Japan has so far seen very little of the low-price action.

Viva Macau are currently operating two flights between Macau and Narita on a weekly basis. “We plan to offer four flights a week starting next year, and we hope to operate as a regular service in the future,” Viva Macau CEO Con Korfiatis was quoted as saying by the Asahi Shimbun.

The road to profitability for the airlines might however prove long - its first flight from Narita carried no more than 19 passengers.

The concept behind the LCC is as simple as it has been proved successful – bring prices down by keeping services to a minimum and cutting corners wherever possible.

One of the reasons Japan has seen so few low-cost airlines is that one of the basic concepts is to operate only on shorter stretches to keep expenses at a minimum. Ideal travel time is less than 5-6 hours. For LCCs operating out of Thailand or Singapore, Japan is simply too far away. It is also questionable whether spending more time than that on a no-frills airplane would be a very enjoyable experience.

The relatively expensive landing fees and other high expenses at certain Japanese airports have also proved an obstacle to LCCs eying the Japanese market. Kansai International Airport, for example, has long been known as the the world’s most expensive airport. The busy schedule at Narita, serving the Tokyo area, has been another effective barrier.

In the meanwhile, LCCs have prospered in South Asia. Asia’s leading LCC, Malaysian Air Asia, now flies to over 48 destinations throughout South Asia and was awarded Airline of the Year 2007. Low-fare airlines have also appeared in Singapore, Thailand, etc, seeing varying degrees of success.

“The Asian carriers are able to operate on approximately a fifth of what the the larger Japanese companies do,” Katsuhiko Okamura, an All Nippon Airlines (ANA) chief engineer was quoted in an Asahi Shimbun report.

Japan has also seen a few attempts at LCC – Hokkaido-based Air Do flew between Sapporo and Tokyo from 1998 but was acquired by ANA in 2000. A handful of other low-cost airlines operate domestically but has yet to make the breakthrough other low-cost airlines have seen in other parts of the world.

Japanese travelers should however expect this situation to change in the near future because of a recent surge of interest in the Japanese market from foreign airlines. A big leap forward is expected in 2010 when Tokyo’s Haneda Airport’s fourth runway is expected to stand completed, allowing the airport to open up for more international airlines.

Korean Airways entered the foray in late November when they announced they will be creating a LCC subsidiary tentatively named Air Korea. The wholly owned subsidiary is intended to operate out of Incheon International Airport, some 60 km west of Seoul, to connect the South Korean capital with some as of yet unnamed Japanese cities. Operation is scheduled to begin in May 2008.

Except for Viva Macau, Australian airline JetStar has also already got a foot in the market. The Qantas subsidiary commenced low-cost flights from Australia to Osaka in March this year, using medium-sized airplanes to fly long haul flights. Flights to Nagoya commenced in August.

Japanese airlines have been seemingly passive in the low-price arena. The exception is ANA, Japan’s second-largest carrier, who recently announced they intended to have started their own LCC by the fiscal year of 2009.

ANA are currently investigating their prospects on the markets. “We do not intend to start a price war, but we are going to gradually decide routes depending on the demand,” ANA President and CEO Mineo Yamato was quoted by the Asahi Shimbun.

Yamato also revealed the company is considering merging with another Asian airline to create a partially owned LCC subsidiary, and that ANA has already approached possible partners in South Korea and China.

“We will create a company that will be able to hold its ground against other Asian LCC’s,” ANA’s PR division was quoted by the Japanese travel industry news site Travel Vision.

The concept of the LCC originated in the U.S., from where it got picked up by the Irish Ryanair, now Europe’s third largest airlines and one of few that has been able to go against the tide of slumping sales figures in the wake of 9/11.

Viva Macau tickets are available through Japanese travel agents H.I.S., Nippon Travel Agency and Hankyu Express International, among others.

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Photo: Takayuki Saito. Creative Commons

Low-cost airlines making their way to Japan

FEATURE While low-cost carriers have since long been successfully operating throughout the U.S., Europe, and southern Asia, Japan has seen very little of the low-price action. Read more...