Budget airlines are finally coming to Japanese skies.
Unlike major carriers, their flights are operated at the lowest possible cost — by providing minimal onboard services and so forth — allowing them to offer fares 30 to 70 percent cheaper than the megacarriers.
In hopes of increasing its presence as an international hub, Aichi Prefecture's Central Japan International Airport, also known as Centrair or Chubu Kokusai Kuko, is trying to win a piece of this new low-frills pie.
Budget airlines that grew up in Europe now see Asia as a growth market. Their share of the Asia-Pacific region is estimated to have soared to much as 15 percent last year.
"We have grown the customer base with discount fares," said Cheon Insung, head of the Japan branch of South Korea's Jeju Air, the only discount airline serving Centrair.
Jeju Air began flying there in late March with daily service to and from Gimpo airport in Seoul. Jeju's fare is nearly 30 percent cheaper than those offered by major airlines. Helped by a recovering tourism industry, seat occupancy exceeded 80 percent in August. "We are only one step away from turning a profit," Cheon said.
Last month, Spring Airlines, a Chinese no-frills carrier that connects Ibaraki and Shanghai, surprised the public by offering ¥4,000 one-way tickets for 10 percent of its seats during a special campaign period.
Meanwhile, All Nippon Airways Co. announced Sept. 9 that before the end of the year it will launch its own budget airline based at Kansai International Airport to survive the competition.
With Haneda airport in Tokyo opening a new terminal in October to handle more overseas flights, other international airports have been forced to look for ways to survive. They're placing a great deal of hope on the burgeoning low-cost carriers because they can't foresee significant growth among the full-service ones.
"We are now in negotiations with several budget carriers," said Centrair President Hiroshi Kawakami.
Centrair's operator is putting top priority on increasing international routes for short and midrange distances. This month, it assigned two staff members to focus on attracting budget airlines.
However, Kansai International Airport Co. has already recruited five budget airlines, the best in Japan. The airport has made landing fees practically nonexistent for airlines opening new international routes through the end of next March, and it's taking a look at developing a special terminal for ANA's new budget subsidiary.
"The rise of low-cost carriers will give travelers more choices on fares and services in addition to those provided by major airlines. They will also be able to choose the airport they want to use," said an official in the corporate strategy office of Kansai International Airport Co.
The low-cost airlines are mainly targeting Asian tourists who until now generally considered international travel an expensive luxury. In that respect, the Kansai airport enjoys an overwhelming advantage over Centrair because of its proximity to such internationally known tourist spots as Kyoto and Osaka.
In fact, on Jeju Air's Chubu-Seoul flights, South Korean fliers have been taking up only 30 percent of the seats, while Japanese have accounted for 70 percent. By contrast, 60 percent of the travelers on the Kansai-Seoul route are South Korean.
Kawakami of Centrair knows he can't expect high demand among tourists for his airport. To make up for this, he said he is considering new tour packages that would tie Chubu with other areas, utilizing the domestic airports spread around Japan.
"Centrair is blessed financially compared with Kansai International, so it might be easier to provide preferential treatment for carriers, such as discounted landing fees," aviation analyst Kazuki Sugiura said. "There should be a way out of the stagnant situation, depending on how it approaches the hurdles it faces."
Attracting travelers from Asian countries can't be achieved solely through the efforts of the airport company. To make up for the Chubu region's tourism "handicap," it is imperative to establish a broader and stronger cooperation system by involving local governments and business circles as well as the tourism industry
http://www.reuters.com/article/idUSTRE69E15R20101015
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