JAL: No worries over LCCs

Hong Kong, 18 July 2012: Japan Airlines said Tuesday the country’s booming budget carrier market would not pose a “tremendous” threat to the flag carrier, which went bust in one of the nation’s biggest-ever bankruptcies.

JAL, which went bankrupt in January 2010 with debts totalling 2.32 trillion yen (US$29 billion), exited bankruptcy protection last year and has logged an annual net profit of about $US2.3 billion in the fiscal year to March 2012.

Its president Yoshiharu Ueki said its revitalisation plan was not threatened by the flourishing low-cost carrier (LCC) scene in Japan, where a third budget airline is due to start flying next month.

“We don’t expect a tremendous impact from the emergence of these LCC,” Ueki told reporters in Hong Kong, adding that budget airlines had yet to make a “very large” impact on JAL’S revenue.

“The LCC represents a new mode of transportation and as a result they have created a new demand — (that did) not exist in the past and demand that we had not expected.

“We are not taking a complacent attitude and we are watching the movement of the LCC market carefully,” said Ueki, a former pilot and the son of Japan’s traditional kabuki drama actor Kataoka Chiezo.

Japan’s major airlines were behind global players in terms of entry into the low-cost sector, but JAL’s main rival All Nippon Airways (ANA) last year set up budget airline Peach Aviation with a Hong Kong investment fund.

It was followed by JAL’s tie-up with Australia’s Qantas which launched Jetstar Japan earlier this month, while AirAsia Japan — a joint venture between ANA and Malaysia’s AirAsia — will start flying next month.

The launch of these budget airlines was part of a bid to open up a market that has traditionally suffered from high prices because of the dominance of JAL and ANA, Japan’s two major carriers.

Japanese media have reported that JAL, which was de-listed due to the bankruptcy, has formally applied to re-list its shares on Tokyo’s main bourse by September. Ueki declined to comment on the progress of the plan Tuesday.

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