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434 total articles
22 total articles
There is perhaps no greater indicator of the nuances in aviation than dual brand strategies. The United-Ted and Delta-Song approaches are mostly forgotten while Qantas-Jetstar trumpet alignment and newcomers like Lufthansa-Eurowings have to insist their plan will work.
What unites the attempts, successes and failures is a belief that dual brand strategies can be a silver bullet, not only gaining back lost passengers but securing new ones. Inevitably there is a lot more to it than that.
A successful dual brand airline strategy needs proper management, but this alone does not guarantee success. External forces can bring a swift end. Labour relations are often a critical factor for success or failure, but also whether a dual brand strategy is needed in the first place.
Japanese LCCs could tackle booming Chinese market as AirAsia Japan launches and Spring Japan expands
There is no shortage of superlatives to describe the passenger traffic growth between China and Japan. Chinese visitors are quickly becoming Japan's single largest tourism source. China Southern's Japan passenger numbers in the first nine months of 2015 have exceeded its traffic for the full year 2014. 14 Chinese airlines intend to serve Japan at the end of 2015, including five carriers which have entered in 2014 or 2015. China's Spring Airlines has virtual bases at Nagoya and Osaka Kansai and is planning to construct hotels in Japan to accommodate the visitors it is bringing over.
Japan's LCC sector is vibrant, with five start-ups in four years. They have helped rejuvenate Japanese traffic despite the shrinking economy and decreasing local population. Yet they have remained absent from the China-Japan market. The 2012 China-Japan territorial dispute weakened travel conditions, and since then the local LCCs appear to have felt overwhelmed by the influx of Chinese carrier capacity. This will start to change: AirAsia Japan plans to launch in Mar-2016 and eventually serve China, a market its affiliate carriers know well. Spring Airlines Japan, the locally established JV of Shanghai-based Spring, will finally commence international services in 2016 and is making two Chinese cities, Chongqing and Wuhan, its first destinations. Despite the growth already witnessed, this is only the beginning for the market. Japanese LCCs will have a role in its expansion.
All Nippon Airways' second attempt at a Tokyo-based LCC remains a conservative effort. Vanilla Air, the re-branded AirAsia Japan, now operates six A320s, up from the peak of five that AirAsia Japan operated.
Vanilla is planning for a fleet of 10 A320s in Mar-2016, representing significantly slower growth than seen at Japan's two other new LCCs, Peach and Jetstar Japan. The majority of Vanilla's ASKs are in the domestic market, but within five years the carrier expects to derive 70% of revenue from the international market.
Vanilla Air will shortly add its fourth domestic destination, Amami, while the international market is experiencing some setbacks. Vanilla would like to add services to Taipei but the carrier has been unable to secure slots. Taiwan and Korea have been popular short-haul markets from Japan, but the Japan-Korea market continues to experience a setback due to tension.
The low-cost carrier focus in Hong Kong is firmly on Jetstar Hong Kong's effort to secure a licence, but much more quietly Hong Kong Express is preparing to re-launch as a LCC on 27-Oct-2013. Hong Kong Express will become Hong Kong's first LCC, and nearly two years after Hong Kong Express first mooted adopting the LCC model.
Its initial network will comprise mainland Chinese as well as Northeast and Southeast Asian destinations, a medley of new cities, previously served ones and actively served ones. Competition will range from light to heavy as it faces formidable full-service and low-cost carriers. Hong Kong Express plans to fly 1.5 million passengers in its first year and have a fleet of 30 A320s by 2018.
Hong Kong Express is clearly not an AirAsia or Jetstar. Its ancillary offering is light and other structural differences, like IT, will make it less robust. This is partially to be expected as it does not have an experienced LCC group to piggyback on, but its launch has hints of being under-whelming compared to what Peach or Scoot achieved.
Vanilla Air will become the new name of AirAsia Japan from 01-Nov-2013. The re-branding exercise follows the Jun-2013 dissolution of the joint-venture between AirAsia and All Nippon Airways that established AirAsia Japan, which commenced flying on 01-Aug-2012. ANA has taken over AirAsia's 49% stake to have complete control and will guide Vanilla Air with 100% management control on its re-launch, ANA's first time establishing a LCC by itself. AirAsia Japan will pause operations at the end of Oct-2013 and resume flying in late Dec-2013 under a new reservation system and with a new fleet of A320s; AirAsia Japan's fleet will be returned to AirAsia.
Vanilla Air plans to have 10 A320s in 2015, making it smaller than Jetstar Japan or Peach. Its domestic and international route network will be similar to AirAsia Japan's but include the leisure beach markets of Guam and Saipan. Vanilla Air will take up AirAsia Japan's Tokyo Narita base, maintaining a split as ANA's partially-owned LCC Peach is based at Osaka Kansai. Full network details will be released in Sep-2013 with sales to commence in Nov-2013 for a late Dec-2013 launch. Before then, ANA has its work cut out to almost create a carrier from scratch as it gets cut off from the AirAsia systems it had been riding on.
LCCs help Japanese domestic market grow for first time in six years, but market situation still dire
The introduction of three low-cost carriers to Japan in 2012 – Peach, Jetstar Japan and AirAsia Japan – may still be fragile with Jetstar Japan curtailing growth and AirAsia Japan losing its founding partner, but the three are showing meaningful improvements to the Japanese economy. In the 12 months to 31-Mar-2013, their passenger traffic has given the Japanese domestic air market, the world's third largest, a needed bump by helping it grow for the first time since 2006.
But the situation is still dire. 2012 was only the third year of growth since 2002, and passenger numbers in 2012 are the same as they were in 1997. No other major market in the world – and high-growth Asia especially – has seen such abysmal performance. International traffic fared only slightly better, with 2012 traffic around only 1999 levels. And despite innovation and new best practices, load factors in the domestic market are at the same low 60% figure of two decades ago. Incumbents have signalled they must change. LCCs may force it.