Japan’s new budget airline will be independent of shareholder All Nippon Airways, with a plan to operate international and domestic operations with Airbus A320s by March next year.
The operating company, provisionally called A&F Aviation, will lease 10 A320s from General Electric Capital Aviation Service, says Airbus.
While A&F says it will follow a budget-airline model, there is little sign that it will operate in tight coordination with All Nippon (ANA), following Qantas’s success with no-frills offshoot Jetstar.
“It’s a totally independent company from ANA,” says a representative of A&F, in which All Nippon will have share of less than 40%.
A&F will begin with three or four domestic routes and three or four services to China and South Korea, says Chief Executive Shinichi Inoue, appointed to the position after leading All Nippon studies on setting up a budget offshoot. Services will begin between October 2011 and March 2012, with a fleet of five aircraft within one year and 16 within five years, Inoue tells Japanese media.
The leased aircraft will be powered by CFM International CFM56 engines and will seat 180 passengers in one class, Airbus says. Among other standard budget-airline policies, it will fly its aircraft intensively and charge for meals, Inoue tells the Kyodo news wire.
A&F was registered on Feb. 10. Japanese investors, including All Nippon, will hold two-thirds of its stock, while Hong Kong private equity company First Eastern Investment Group will own the rest. By the time it begins flying it should have capital of ¥15 billion ($180 million).
The company aims to be profitable within three years, as has been normal for budget airlines established elsewhere, Inoue tells the Jiji news wire. Analysts have long been skeptical that a truly low-cost airline could operate from Japan, where wages, rents and other expenses are high.
A&F is aiming at achieving costs of only about half of those of full-service airlines, Inoue says. Its base will be Kansai International Airport, near Osaka, and its target customers are leisure travelers.
Major network airlines have had mixed success in setting up budget subsidiaries and affiliates. Qantas has been perhaps the most successful, by building Jetstar up from the low cost base of a small privately run airline and by deploying it on routes where mainline services would struggle to make money.
A&F says it will choose a brand before services begin.
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