‘There will probably be a lot of pricing competition among incumbents,’ says analyst Russell Shaw.JETSTAR executives will be holding their breath tomorrow when they launch a new offshoot in Japan, a market where budget airlines are a new phenomenon.
The biggest challenge for Jetstar Japan will be to convince the Japanese, who are accustomed to flying full-service airlines on domestic routes, to opt for a no-frills airline.
After years of lobbying to get it off the ground, Qantas chief executive Alan Joyce and Jetstar’s new chief executive Jayne Hrdlicka will join the boss of Jetstar Japan, Miyuki Suzuki, on the first flight from Tokyo’s Narita Airport to Sapporo on the northern island of Hokkaido.
The launch has been brought forward by several months in an attempt to pip Jetstar’s arch rival, AirAsia, in setting up domestic services in Japan.
Royal Bank of Scotland’s transport analyst Mark Williams said the rationale for launching a new airline in Japan was strong, but ”it’s just a question of how quickly the Japanese take to it”.
”The dynamics of the low-cost carrier market in Japan are untested, so it will be interesting to see what the take-up is over there,” he said.
”In almost every other market globally, [the entry of budget airlines] has stimulated travel and [low-cost carriers] have broadly done well.”
A Macquarie Equities analyst, Russell Shaw, said the new budget airline was likely to succeed as long as it was marketed correctly and its passenger service was suitable for the Japanese market.
”The only challenge over time is that there will probably be a lot of pricing competition among the incumbents,” he said.
Jetstar Japan will start with three new A320 planes – each seating 180 passengers – before increasing its fleet to 24 within several years.
The expansion into Japan follows Jetstar setting up joint-venture operations in Vietnam, New Zealand and Singapore.
It also plans to launch a joint venture in Hong Kong next year.
Qantas and Japan Airlines each hold a 33 per cent stake in Jetstar Japan, while Mitsubishi and Century Tokyo Leasing have interests of 16.7 per cent each.
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