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All Nippon Airways Mulls Budget Subsidiary

ANA considers establishing new low-cost carrier

Jun 21, 2010

TOKYO - All Nippon Airways is considering establishing a new low-cost air carrier based at Kansai Airport near Osaka, Japan, for both domestic and international routes, industry sources said Saturday.

ANA plans to peg the carrier's international fares at about half those of major airlines, while one-way domestic fares would be priced at less than 10,000 yen-the same level as express buses.

ANA aims to better compete with budget airlines in other Asian countries, which have been rapidly increasing their presence. ANA wants to begin operations of its low-cost carrier next fiscal year at the earliest, the sources said.

The yet-to-be established subsidiary likely will have a different brand name than ANA, and its international routes mainly would service China and other Asian countries.

ANA envisions the budget airline will operate more frequent, short-range routes than current services, using small and midsize aircraft with about 200 seats to ensure high turnaround rates.

ANA believes costs can be cut by simplifying in-flight service and employing non-Japanese pilots, for example.

Kansai Airport is trying to lure budget airlines as it considers constructing dedicated passenger terminals for budget airlines at lower fees.

ANA has begun negotiating with the airport operator on usage fees and other conditions, the sources said.

In its national economic growth strategy drafted last month, Japan's Land, Infrastructure, Transport and Tourism Ministry set a policy to lower airport landing fees and relax regulations, saying that creating more favorable conditions for budget air carriers is essential for Japan to lure more Asian tourists.

As the ministry also is considering drastic measures to aid the airport's financial reconstruction, ANA judged that business conditions were optimal for establishing its low-cost carrier subsidiary, the sources said.

According to the International Air Transport Association, budget airlines were ranked among the highest in terms of passenger numbers last year.

Southwest Airlines was No. 1 with 101.33 million passengers while Ireland's Ryanair was ranked fifth with 65.28 million.

The IATA said budget carriers have grown to account for about 20 percent of available seats in the global air transportation market.

ANA considers establishing new low-cost carrier
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Source: The Yomiuri Shimbun

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