Budget Carrier Air Japan Poised to Start Flights to Bangkok; New Airline to Focus on Southeast Asia Routes

The Yomiuri Shimbun

2:00 JST, February 9, 2024

New budget carrier Air Japan, a subsidiary of ANA Holdings Inc., will start flights between Narita Airport and Bangkok on Friday, a major step in ANA’s efforts to attract budget-conscious tourists who want to visit Japan.

Air Japan is the third airline brand under ANA’s corporate umbrella, alongside its flagship carrier All Nippon Airways and low-cost carrier Peach Aviation. Based at Narita Airport near Tokyo, Air Japan will build up a network of medium-distance international routes in Southeast Asia and elsewhere. Industry observers are looking to see whether Air Japan can capture new demand amid the ongoing surge in visitors to Japan.

At an event that also showcased one of the airline’s aircraft at Narita Airport on Tuesday, Air Japan President Hideki Mineguchi was encouraged by the initial response to the company’s first flight route.

“Seats on the maiden flight have already sold out,” Mineguchi said. “While our airline is still unknown overseas, many people have supported us.”

All seats on Air Japan flights are economy class and the same size as those on All Nippon Airways aircraft. Maintenance and onboard customer service will be provided by staff shared with ANA. However, Air Japan plans to keep fares down by charging passengers for in-flight meals and checked baggage.

One-way tickets to Bangkok start from ¥15,500. Comparing fares in May, a round trip on ANA will cost between ¥110,000 and ¥120,000, while the same trip on Air Japan will cost about half that amount. More affordable fares should be a major strength for Air Japan, which will start flights to Seoul on Feb. 22 and to Singapore on April 26.

Air travel plummeted during the COVID-19 pandemic, and international flights have been slow to return to earlier levels, with airlines hampered by staff shortages. Despite this, demand for travel has quickly rebounded, resulting in soaring airfares.

Between October and December 2023, average revenue per passenger based on distance traveled was 50% to 60% higher for both ANA and Japan Airlines compared with the same quarter in 2019. Although this has boosted the airlines’ business performance, there is a clear downside for customers. “Some people are opting not to travel by air because it’s too expensive,” an industry insider told The Yomiuri Shimbun.

Those determined to still have their trip abroad are opting for cheaper flights with reduced services. In the fiscal year ending March 2023, JAL subsidiary Zipair Tokyo recorded its first net profit since the airline was established in 2018. Visitors to Japan were instrumental in this achievement, lured here by low ticket prices down and a weak yen.

Air Japan forecasts that at least 70% of its passengers will be foreign visitors, so the airline is focused on capturing demand from its destinations abroad. In-flight meals available for a fee on the Bangkok route have been designed to suit the tastes of Thai people, with local chefs helping arrange the menu.

Zipair already flies to all three cities that Air Japan plans to make part of its network, so competition on these routes likely will intensify. Air Japan will be faced with the problem of distinguishing itself somehow from other airlines.

Yasuo Hashimoto, a researcher at Japan Aviation Management Research, said turning a profit would be difficult on medium- and long-distance routes for which airfares were being kept down.

“With fuel costs rising, these airlines are able to operate only a limited number of flights, so it won’t be easy for them to generate profits,” Hashimoto said.

Air Japan looks likely to face a difficult balancing act as it competes with rival airlines while also trying to coexist with fellow members of the ANA group.