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Vanilla Air to stress low-cost int'l flights

AirAsia Japan President Tomonori Ishii speaks at a press conference in Chiyoda Ward, Tokyo, on Tuesday.

Publication Date : 23-08-2013

 

AirAsia Japan, a wholly owned subsidiary of ANA Holdings Inc. that will be renamed as “Vanilla Air” in November, will try to distinguish itself from other low-cost carriers by strengthening international flights linking Japan and holiday destinations abroad.

But the new carrier faces many problems. It has fewer passenger planes than it will need, and Narita Airport, where it is based, restricts departures and arrivals late at night and early in the morning.

In June, All Nippon Airways dissolved its joint venture with AirAsia of Malaysia, the biggest low-cost carrier in Asia, because of management policy differences and other reasons. ANA then acquired 100 per cent ownership of AirAsia Japan.

AirAsia Japan will suspend services on October 26 and resume operations in late December under its new Vanilla Air name. Vanilla Air will use Airbus A320 planes, which have a flight range of about four hours, according to AirAsia Japan President Tomonori Ishii. Therefore, the main routes for Vanilla Air, at least in its early phase, are likely to be relatively short flights to such destinations as Guam, Saipan and Hong Kong.

Meanwhile, Jetstar Japan, which is affiliated with Japan Airlines, is expanding its network of domestic routes. Strategic differences among dometic budget airlines are thus becoming more apparent.

In general, low-cost carriers keep fares low by reducing the turnaround time of each plane at an airport and operating the same plane many times in one day. But the operating hours of each flight by Vanilla Air, with its focus on international flights, will be longer than those of competitors emphasising domestic routes, so it will be difficult for the company to increase the number of flights.

Also, the company is set to return the entire five-plane fleet it now has on lease from AirAsia. When it resumes service in December, it will be able to operate only two other planes, to be leased from ANA.

Ishii insists this will have no impact on the company’s earnings because the unit price of international airfares is higher than that of domestic flights. But the limited range of the Airbus A320 means it cannot fly longer routes, including those to Hawaii and other lucrative destinations. Therefore, it will be important for Vanilla Air to choose routes on which it can secure enough passengers and at the same time increase profitability even with a small number of flights.

On Tuesday, major travel company HIS started chartered services between Narita and Bangkok using its aviation subsidiary, Asia Atlantic Airlines.

Although Ishii declared that Vanilla Air would aim to sell tickets for half the fare charged by major airlines, competition for customers could become fierce with new rivals, such as HIS, and foreign airline companies.

Departing from Centrair

Asked why he chose the name “Vanilla Air,” Ishii said: “Vanilla [as a spice] is loved by people all over the world. We will offer high-quality service while staying unpretentious and simple.”

When the company resumes service in December, the number of passenger planes it operates will be reduced from five to just two.

“We’ll get the number back to five as soon as possible before the end of March,” Ishii said, adding that he aimed to build up an operation system with 10 passenger planes by fiscal 2015.

For the time being, however, the company will focus on getting its business on track at Narita Airport. Therefore, Ishii is thinking of temporarily withdrawing from Central Japan International Airport in Tokoname, Aichi Prefecture, where the company began service in March.

AirAsia Japan trails rival carriers in its seat occupancy rate in part because it has not been making the most of its online reservation system and other reasons. Less than 60 per cent of its seats are filled, while other budget carriers fill more than 70 per cent or even 80 per cent.

“We are competitive in flight fares. We’d like to improve our sales system and other services,” Ishii said.

 

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