AirAsia Japan Confirms South Korean Growth

AirAsia Japan has formally announced the launch of its first international flights and as expected these will cover the South Korean destinations of Busan and Seoul Incheon. The AirAsia Group affiliate, a joint venture with established Japanese carrier All Nippon Airways (ANA), will offer daily flights on the routes from the end of October, confirming our report from earlier this year about its international growth aspirations.

One of three new low-cost carriers fighting for marketshare in the Japanese skies, AirAsia Japan launched operations in August this year from a base at Tokyo’s Narita International Airport. It is currently operating domestic flights to Okinawa, Sapporo and Fukuoka, but international growth has always been part of its business model.

“AirAsia Japan’s announcement of this international route today is a dream come true for us,” said Tony Fernandes, Group Chief Executive Officer, AirAsia. “This is a great day for all of us, and an even greater day for the consumers & air travelers in Korea. With AirAsia’s low fare, everyone can now travel to more places more often.”

The flights to Seoul Incheon will commence on October 28, 2012 while the services to Busan will follow from November 28, 2012. AirAsia Japan will compete with local carrier’s ANA and Japan Airlines (JAL), South Korean operators Asiana, EastarJet and Korean Air as well as US operators Delta Air Lines and United on the Incheon route and JAL, Korean Air and Air Busan on the Busan link.

“The announcement of our new international routes to Korea gives me much pleasure as AirAsia Japan can now further expand the AirAsia Group’s existing extensive route network, connecting Japan and other countries in Asia,” said Kazuyuki Iwakata, Chief Executive Officer, AirAsia Japan. “It makes much sense to begin our international flights to Korea, our next-door neighbour.”

This month there are already over 110,000 seats available in each direction between Tokyo Narita and Seoul Incheon with just less than 24,000 on offer on the Tokyo Narita – Busan route. The tables below highlight the current capacity in these two markets ahead of AirAsia Japan’s launch.

The Tokyo Narita – Seoul Incheon market is currently dominated by Korean operators with Asiana Airlines and Korean Air accounting for almost two thirds of the total seat capacity between them. ANA has just a 4.5 per cent share of the available seats and is ranked the sixth largest operator in this market and will partly explain why AirAsia Japan is entering this particular market. Comparing this month’s schedules with October last year, both Asiana and Korean Air have shown a small decline in capacity, while low-cost carrier EastarJet ha sboosted it own seat capacity by 14.4 per cent, albeit it remains the seventh largest operator on the route.

When AirAsia Japan launches its service on this route it will introduce 180-seats a day into the marketplace or 1,260 a week. This represents a seat growth on this city pair of 4.9 per cent, with the low-cost carrier holding around a 4.7 per cent share of the total capacity.

Alongside the direct competition, AirAsia Japan will also face in-direct competition between the two cities from the Tokyo Haneda – Seoul Gimpo operations of ANA, Asiana Airlines, JAL and Korean Air. A further 114,762 one-way seats are offered on this route, doubling the air service capacity between the two Asian capital cities.

ANA has no presence on the Tokyo Narita – Busan route which is currently dominated by local rival JAL and Korean Air. Air Busan, a subsidiary of Asiana Airlines, has been growing strongly in this market but still remains the number three carrier by capacity, according to latest schedule data. There has been very little change in capacity this month versus October 2011 from these three airlines, but the closure of Delta Air Lines own flights on this route as an extension of its US originating services has resulted in an 18.5 per cent overall capacity reduction.