Friday, February 14, 2014

New AirAsia Japan names CEO; official launch in April.

AirAsia's (AK/AXM) director Tony Fernandes is currently in Japan to finalize plans to re-launch their Japanese unit AirAsia Japan (Mk II), which is expected to commence flights in 2015. Its first incarnation, a joint-venture with All Nippon Airways' (NH/ANA) parent ANA Holdings, was terminated in June 2013 over differences in decision-making. AirAsia Japan ceased operating on October 26th, 2013 and re-launched as Vanilla Air (JW/VNL) on December 20th under 100% ANA control.
Mr. Fernandes' Twitter photo with Mr. Odagiri, Mr. Hata, and their team. (Image: Tony Fernandes)

On February 13th, Mr. Fernandes mentioned on Twitter that they have named former AirAsia Japan (Mk I) (JW/WAJ) head Yoshinori Odagiri its CEO for the new AirAsia Japan, along with naming Osamu Hata, who previously worked with Dell, its CFO.

Mr. Odagiri started with ANA in 1987, and other than a spell with Nippon Cargo Airlines (KZ/NCA) from 1991 to 2000 when the freight airline was still partly owned by ANA, has spent his entire career with the ANA Group going through the Operations and Station Control departments as well as Asia Marketing. He became an executive for the first AirAsia Japan at the time of launch in August 2011, and was named CEO in December 2012, taking over Kazuyuki Iwakata, when financial results weren't improving. June 2013 saw the joint-venture being dissolved, and two months later ANA announced the decision to replace Mr. Odagiri with Tomonori Ishii, a staunch ANA veteran since 1974, and re-brand the airline Vanilla Air. Mr. Odagiri currently serves as an Advisor to Vanilla Air, a largely ceremonial position, but it had been widely expected that he would be quitting.
AirAsia Japan's (Mk I) Airbus A320-214 JA02AJ is now in Indonesia as PK-AZI. (Photo: Aviation Wire)

And who would be what Mr. Fernandes calls "fantastic new partners" in Japan? According to an interview, along with AirAsia are 'up to three' Japanese companies, which he refused to identify, planning to invest up to 70 million USD in start-up capital. A photo on his Twitter showing a meeting with Hiroshi Mikitani, CEO of Rakuten, originally an IT venture but now Japan's largest e-commerce firm and a multinational internet business which also owns the Tohoku Rakuten Golden Eagles (Nippon Professional Baseball) team, may be a hint. Foreign ownership of Japanese airlines is capped at 33%, but having three partners instead of one or two would likely enable AirAsia to retain the biggest share. For the first AirAsia Japan, they erred in giving ANA majority control at 67%.

Now where will the new AirAsia Japan be based at? Mr. Fernandes also declined to comment, however, it is expected to be a 24-hour airport in western Japan, and there are only four: Nagoya/Chubu Centrair (NGO/RJGG), Kitakyuhsu (KKJ/RJFR), Okinawa/Naha (OKA/ROAH), and Osaka/Kansai (KIX/RJBB). The first AirAsia Japan was based at Tokyo/Narita (NRT/RJAA), but Mr. Fernandes has already ruled it out, calling the slot-regulated and curfew-plagued airport where they "should never have been in the first place".
AirAsia Japan (Mk II) CEO Yoshinori Odagiri also headed Mk I. (Photo: Aviation Wire)

If I may put my two cents in, the top two candidates are probably Chubu Centrair and Kansai. Naha is Peach Aviation's (MM/APJ) second hub and the local population is probably not as large to support two LCCs, and even Peach will use it mostly as a scissors hub to transfer passengers between southeast Asia and the main islands of Japan. Kitakyushu is an alternative airport to Fukuoka, but hometown carrier Star Flyer (7G/SFJ) has so far failed to carve out a market other than a handful of connections to Tokyo.

Kansai is already a hub for Peach with Jetstar Japan (GK/JJP) also intending to make it its second hub after Narita, so competition would be fierce, but the pie is big and the population is getting used to LCCs. Nagoya is Japan's third largest metropolitan area with a population of 8.9 million, but is considered relatively under-served, with ANA providing the bulk of domestic flights and Japan Airlines (JL/JAL) maintaining minimal presence. The issue with Nagoya would be the need to develop the still immature market. In 2013 Chubu Centrair committed to building a LCC terminal, though AirAsia Japan's (Mk I) demise forced the airport to delay plans. AirAsia's long-haul arm AirAsia X (D7/XAX) is launching flights to Chubu Centrair next month, and a local AirAsia network based at this airport strategically located in central Japan would help both by offering a 'Fly-Thru' product.

AirAsia plans to formally announce the new Japanese venture in April. AirAsia Japan (Mk II) plans to launch regional international and domestic routes in 2015 with Airbus A320s, well ahead of Tokyo's hosting of the 2020 Olympics. Exciting times ahead.

Source: Bloomberg Japan, February 14th. (in Japanese)
Source: Tony Fernandes @ Twitter (in English)

*Post edited/updated on March 7th.

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