Wednesday, October 16, 2013
Narita-Based Budget Carriers Hemorrhaged Red Ink In 1st Year
TOKYO (Nikkei)--First-year earnings results for the three Japanese budget airlines show that Narita-based Jetstar Japan and AirAsia Japan Co. are struggling far more than Kansai-based Peach Aviation Ltd.
Government data shows that Peach Aviation sustained just a 900 million yen operating loss on sales of 14.3 billion yen for the year through March. Meanwhile, Jetstar Japan bled 9 billion yen in red ink on sales of 12.8 billion yen for the year through June, with AirAsia Japan logging an operating loss of 3.3 billion yen for the eight months through March.
Despite Jetstar Japan's efforts to attract more customers through low fares, Narita airport's location -- far from central Tokyo -- prevented passenger growth on domestic flights.
The airline has sought to add Kansai-based routes, but the plan is being delayed due to aircraft maintenance problems cited by the Transport Ministry. The company, which received a second warning from the ministry on Wednesday, will work to improve its maintenance reliability so it can quickly obtain approval for the Kansai hub.
AirAsia Japan has also struggled to increase passengers on Narita-based domestic flights, partly because of its difficult-to-use online booking system. Its inability to attract more customers contributed to the firm's 3.6 billion yen net loss.
The carrier is slated to begin service Dec. 20 under a new name, Vanilla Air, operating as a wholly owned subsidiary of ANA Holdings Inc. (9202). It will work to step up international services to better capitalize on Narita airport's strength, aiming to turn a profit within three years.
Peach Aviation, on the other hand, surpassed Jetstar in sales despite having fewer aircraft. Flying from the less crowded Kansai airport has helped maintain high operating rates for its fleet. Its passenger load for last fiscal year, at 78%, exceeded projections. The company may be able to turn its operations profitable as early as the current fiscal year.
To help the two faltering budget carriers, Narita airport is offering discount parking for their customers and has set up 24-hour convenience stores to better serve early-morning flyers.
(The Nikkei, Oct. 16 morning edition)