AirAsia calls time on Japanese venture
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AirAsia’s brief foray into the Japanese domestic aviation sector will soon come to an end, after the low-cost carrier agreed to terminate its AirAsia Japan joint venture with ANA.
The two parties have ended weeks of speculation by signing a termination agreement, bringing the two-year-old venture to a close. High costs and disagreements over the running of the Tokyo Narita-based low-cost carrier had caused friction between the two parties, and now ANA has agreed to purchase all of AirAsia’s shares in the joint business and set up its own Narita-based carrier.
The buyout will cost ANA JPY2.45 billion (US$25 million) and the Japanese carrier will have to return all AirAsia aircraft to the Malaysian group. All AirAsia Japan operations will be wound up by 31 October 2013 and the unit’s fleet of four Airbus A320s will be returned to AirAsia by 1 November.
“I have great respect for ANA… but it is time for us to part ways and focus our attention on what we do best, which is running a true LCC.” said AirAsia’s group CEO, Tony Fernandes.
“Despite the cost issues, the AirAsia brand has resonated with Japanese customers and the trend we see for July and August is very strong for all of Japan. I remain positive on the Japanese market and believe there is tremendous opportunity for a LCC to succeed, as proven by the tremendous success AirAsia X has seen.
“We have not given up on the dream of changing air travel in Japan and look forward to returning to the market,” he added.
AirAsia Japan launched last August, at the same time as rival domestic LCC, Jetstar Japan, and just months after ANA had launched its own Osaka-based budget airline, Peach. Since the launch however, has struggled with high operating costs and low demand. Average load factors on AirAsia Japan’s flights were just 70% in the first quarter of 2013.
AirAsia said it will continue to operate international flights to and from Japan using its long-haul subsidiary, AirAsia X. The company also operates regional units in Malaysia, Thailand, Indonesia and the Philippines and will soon launch a new subsidiary in India.
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