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Jan 27
Business & Politics
Increasing Planes to 100 by Jetstar Japan

100 planes by end decade - iNewsTodayJetstar Japan Co., the budget carrier set to begin flights this year, said it may grow to 100 planes by the end of the decade, helped by fares about 50 percent cheaper than full-service airlines.

“I’m quite bullish that this is going to be possible,” Chief Executive Officer Miyuki Suzuki said in an interview in Tokyo yesterday. The carrier, part-owned by Japan Airlines Co. and Qantas Airways Ltd., is ahead of schedule in its startup plans, she said, without giving a date for the first flight.

Jetstar, one of three Japanese budget carriers preparing to start services this year, expects lower fares will lure passengers and spur new travel demand, Suzuki said. Discount carriers will about triple their share of Japanese air travel to 35 percent by 2020, she said.

“Customers will be delighted with the cheaper fares, which are going to create more demand,” said Ryota Himeno, an analyst at Mitsubishi UFJ Morgan Stanley Securities Co. “It’ll escalate competition in the domestic market though, which will be worrying for the current operators.”

Skymark Tumbles

Skymark Airlines Inc., Japan’s largest budget carrier, tumbled as much as 9.5 percent in Tokyo trading and was down 9.2 percent to 781 yen as of 10:47 a.m. All Nippon Airways Ltd., the nation’s largest listed carrier, fell 0.5 percent to 223 yen.

Jetstar Japan has received three of the 24 Airbus SAS single-aisle A320s it plans to operate in the first few years, Suzuki said. The carrier will expand its fleet by working with the wider Jetstar Group, which had 170 planes on order as of August, she said.

“Whenever low-cost carriers come in, the number of available seats expands quite rapidly,” said Suzuki, who joined Jetstar last month. She previously worked as president and CEO at telecommunications company KVH Co. and as Asia-Pacific head for online information provider LexisNexis.

The Tokyo-based airline will be the third Asian venture for Qantas budget arm Jetstar, following operations in Singapore and Vietnam. Qantas CEO Alan Joyce has expanded the unit as competition from Emirates Airline and other Middle Eastern carriers damp earnings at the Australian company’s full-service operation.

Overseas Flights

Jetstar Japan plans to add short-haul overseas flights next year, according to Jetstar’s website. The carrier may also eventually lease larger A330s or Boeing Co. planes so it can fly long-haul service, Suzuki said. It will initially operate from Tokyo’s Narita airport and Osaka’s Kansai airport.

The carrier has 4.8 billion yen ($62 million) in capital from Tokyo-based JAL, Qantas and Mitsubishi Corp., Japan’s largest trading group. That will increase to 12 billion yen after the start of operations, Suzuki said.

The new airline isn’t looking to raise more money and it has no set plans for a share sale, she said. Parent JAL, which is controlled by a government-backed turnaround fund, intends to hold an initial public offering as soon as September.

All Nippon Airways is backing two low-cost carriers that are due to start operations this year. AirAsia Japan Co., a venture with AirAsia Bhd., will begin flying in August from Narita. It aims to have about 30 planes and 10 million passengers annually by 2016.

Peach Aviation Ltd., backed by ANA and Hong Kong-based Far Eastern Investment Group, plans to start flights from Kansai in March. It aims to lease 10 Airbus A320 planes and boost passenger numbers to 6 million annually within five years.

A total of 84 million passengers flew domestically in Japan in 2010, according to the latest figures available from the nation’s transport ministry.

Japan’s aviation market is worth $62.5 billion annually, representing about 6.5 percent of worldwide scheduled traffic and 10 percent of industry revenues, according to the International Air Transport Association.

Japanese domestic sales are worth $19 billion, said IATA, an industry group that represents 240 carriers and 84 percent of air traffic.

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