Japan's ANA to form low-cost carrier with AirAsia

Agence France-Presse

Posted at Jul 21 2011 07:48 PM | Updated as of Jul 22 2011 03:48 AM

TOKYO - Japan's All Nippon Airways and Southeast Asia's largest budget carrier AirAsia on Thursday said they will form a joint venture to establish a low-cost airline that will be based in Tokyo.

AirAsia Japan will be the first low-cost carrier out of the capital's Narita International Airport when it begins domestic and international operations in August 2012, the companies said.

ANA will hold a 67% stake in the AirAsia Japan venture in terms of voting rights, with AirAsia holding the remainder.

They cited Japan's aviation market as "undergoing rapid transformation with developments including the expansion of Open Skies agreements and increased domestic competition from road and rail-based travel."

AirAsia Japan will serve the Japanese domestic market from Narita airport as well as South Korea and Taiwan.

At a press conference, ANA president Shinichiro Ito said that ticket prices could be up to half those of the Japanese carrier's regular fares.

"The key to the success of this airline is actually the airfares: can we make the airfares low enough to stimulate people to travel more often," said flamboyant AirAsia CEO Tony Fernandes.

"AirAsia Japan will not only boost economic growth between ASEAN and East Asia by providing better access to markets around the region, but also enhance links within travel, trade and tourism."

Narita, a major international hub, is also seeking to increase capacity with the introduction of a new terminal and is expected to attract many low-cost carriers and foreign airlines, amid expectations of increasing competition in Japanese airspace.

Japan's existing cheaper domestic carriers such as Skymark and Air Do have been unable to offer the kind of heavily discounted fares associated with budget airlines in the United States and Europe due to higher operating costs.

AirAsia has other similar joint-ventures in Southeast Asia -- in Thailand, Vietnam, and the Philippines -- while its long-haul airline AirAsia X flies to Tokyo's Haneda airport.

ANA holds a 33.4% stake in budget carrier Peach, which aims to begin domestic services out of Kansai International Airport in the western Japanese city of Osaka in March 2012.

Shares in AirAsia ended up 4.9% at 3.67 ringgit in Kuala Lumpur on the news, while ANA shares closed 0.37% higher at 271 yen in Tokyo ahead of the announcement.