AirAsia Launches Low-Cost Carrier in Japan

By webadmin on 10:15 pm Jul 21, 2011
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A. Lin Neumann

Tokyo. AirAsia’s new venture with ANA Group of Japan will make Southeast Asia’s largest budget airline a truly Asian company, AirAsia chief executive Tony Fernandes said on Thursday.

“We now become the ‘Asia’ in our name,” Fernandes told the Jakarta Globe shortly before the announcement. “We have really been Asean until this point,” he said. “Our comfort zone was Asean so we are really taking a step to say we are ready to take on the whole of Asia.”

The joint announcement — three years in the making — was made by Fernandes and Shinichiro Ito, the president and CEO of ANA, Japan’s biggest airline.

The new joint venture airline will be known as AirAsia Japan and will bear the familiar red color and branding of AirAsia. It plans to begin flying next year.

“We are surrounded by red today,” Ito said. “I am excited by the color red.”

Ito said the two new partners came together because of “turbulence” in an increasingly complex Asian airline industry.

He said rising competition in Japan from railways and an aging population had posed a “big threat” to ANA that it was seeking to turn to its advantage by joining forces with AirAsia to create a low-cost alternative.

ANA, which was founded in 1952, also has a major stake in Peach Aviation, Japan’s first low-cost carrier that is expected to start flying in March 2012 from its base in Osaka. Ito said Air Asia Japan will create “new demand” and give it more flexibility by operating out of Tokyo’s Narita International Airport.

Asked if he saw a conflict given ANA’s stake in Peach, Fernandes said, “The market is huge. This market has never had low fares so there is enough for all of us. One day, if we all like each other, maybe we can get together. I love peaches.”

Fernandes said AirAsia Japan would start operating next year, but he and Ito declined to say where the carrier would fly.

Fernandes said ANA sought out his company three years ago. The delay, he said, came about because ANA had to get used to his free-wheeling management style. 

“I think at first they were shocked,” said the former music industry executive. He said he insisted in negotiations with ANA that AirAsia have complete operational control of the new venture.

“I am convinced that AirAsia Japan will make airlines more accessible [in Japan],” Ito said.

“I think we will paint the skies red,” Fernandes added. “We will be a fun, red bird.”

A persistent cheerleader for low-cost carriers, Fernandes said AirAsia prided itself on opening new routes and spreading the reach of air travel to new destinations.

“The key to this is the airfares. Can we make the airfares low enough to attract more passengers? I believe we can do this in Japan,” Fernandes said. “I believe our flights could be cheaper than the taxi fare here. If we can sell tickets to Osaka for $30 you will go there for lunch.”

Ito said the biggest challenge facing the new AirAsia Japan would be to get regulators to expand the reach of Narita into the Japanese domestic market. 

Fernandes said he was hoping to secure a dedicated low-cost terminal for the carrier at Narita.

AirAsia dominates Terminal 3 at Jakarta’s Soekarno-Hatta International Airport and has its own dedicated terminal in Kuala Lumpur.

AirAsia began in 2002 with two planes and now has a fleet of 114 aircraft operating out of three national hubs — Indonesia, Malaysia and Thailand. The carrier also operates AirAsia X, which flies on long-haul international routes from its hub in Kuala Lumpur. AirAsia flew 33 million passengers last year.