Star Flyer loads Kitakyushu – Taipei charter.

On February 4th, Star Flyer [7G/SFJ] announced that they will operate three round-trip charters between Kitakyushu [KKJ/RJFR] and Taipei/Taoyuan [TPE/RCTP] during Japan's Golden Week peak travel period in May. 150-seat Airbus A320s will be assigned. Travel agencies JTB World Vacations and H.I.S. will market the packaged tour in Japan, while an undisclosed firm in Taipei has been contracted to sell tickets in Taiwan.

Airbus A320-214 JA05MC City of Kitakyushu at Haneda. Star Flyer is considering revamping the interior of its A320s, as well as increasing seat count from 150 to 166, matching that of ANA's A320s. The current generous low-density configuration would be unsustainable if and when fuel prices go up again. (Photo: Ryosuke Yano)

In May last year, the Kitakyushu-based airline had announced that it would consider midnight international charters to regional Asian destinations from its base as well as Nagoya/Chubu Centrair [NGO/RJGG], Osaka/Kansai [KIX/RJBB], and Tokyo/Haneda [HND/RJTT], as part of its mid-term strategy dubbed Pursuit of Star Flyer-ness 2020 (Star Flyer back in black, mulls international charters.). The red-eye flights increase utilization by flying them during the midnight when most domestic airports are closed.

Flight Schedule:
Kitakyushu – Taipei NEW charter with A320-200.
7G9671 KKJ 2330 – 0100(+1) TPE 32A/320 *May/2, 4, 6.
7G9672 TPE 0230 – 0550 KKJ 32A/320 *May/3, 5, 7.

With assistance from ANA Holdings, Star Flyer successfully turned itself around in FY2014, reporting a 431 million JPY net profit for the fiscal year ending in March 2015 over a 3.04 billion JPY loss for FY2013. The parent of Japan's largest airline is Star Flyer's biggest shareholder and has a 17.96% stake, and its current President Sadami Matsuishi is an ANA veteran (New Star Flyer President is from ANA.). All routes and all but a single Haneda – Kitakyushu round-trip code-share with ANA, and the partnership generates well over 30% of the Kyushu carrier's total revenue (Star Flyer launches Yamaguchi-Ube.).

Star Flyer currently operates nine 150-seat A320s on domestic routes. Their sole scheduled international route launched in July 2012 between Kitakyushu and Busan/Gimhae [PUS/RKPK] was suspended in March 2014 due to heavy losses.

Source: Star Flyer, 2016 February 4th. (in Japanese)

Fuji Dream mulls Chubu – Narita and international charters.

Fuji Dream Airlines [JH/FDA] will reportedly launch a base at Nagoya/Chubu Centrair [NGO/RJGG] by 2017 (Fuji Dream plans Izumo, Kitakyushu, and Chubu Centrair.) and start international charters along with Chubu Centrair – Tokyo/Narita [NRT/RJAA], according to an interview by Chunichi Shimbun with President Yohei Suzuki. The niche regional carrier currently operates only domestic routes from its hubs at Nagoya/Komaki [NKM/RJNA], Chubu (Greater Nagoya) region's older but convenient airport near downtown, and Shizuoka [FSZ/RJNS], where it is headquartered.

Embraer ERJ170-200/STD JA08FJ Tea Green at Aomori, moments before rotation. Fuji Dream plans a fleet of a dozen E-Jets by 2018, though the Mitsubishi Regional Jet is currently being evaluated as a replacement in the long-term. (Photo: Ryosuke Yano)

FDA flies nine aircraft, comprised of six 84-seat Embraer ERJ170-200/STD (E175) and three 76-seat ERJ170-100 (E170), with the next E175 arriving in March 2016 and another coming one year later (Fuji Dream orders up to six more Embraer E175s.). All of its aircraft either return to Komaki or Shizuoka for the night, as most of the airports it serves have curfews, and FDA intends to take advantage of Chubu Centrair's 24-hour operation to experiment late-night or early-morning international charters to China, South Korea, and Taiwan. Other open-around-the-clock airports such as Kitakyushu [KKJ/RJFR] and Osaka/Kansai [KIX/RJBB] are also being considered as points of origin.

The Shizuoka-based airline also plans to add Chubu Centair – Narita in the daytime to cater to international connecting passengers, and they are reportedly talking with European and North American airlines (non-Star, non-Oneworld?) for a code-sharing agreement. Meanwhile, it will maintain its domestic network from Komaki, which currently boasts nine destinations including Aomori [AOJ/RJSA], Fukuoka [FUK/RJFF], Hanamaki [HNA/RJSI], Izumo [IZO/RJOC] (Fuji Dream launches Izumo and Kitakyushu.), Kochi [KCZ/RJOK], Kitakyushu, Kumamoto [KMJ/RJFT], Niigata [KIJ/RJSN], and Yamagata [GAJ/RJSC].

FDA has largely been able to gain popularity due to it being the sole carrier at Nagoya's preferred airport near downtown, where it essentially filled the void left by J-Air [XM/JLJ], which withdrew in March 2011. However, their upcoming 10th aircraft cannot be based at Komaki due to limited parking space, and further expansion at Komaki would come against the Aichi Government and local companies' desire to consolidate all flights at Chubu Centrair. A gentleman's agreement also prohibits flights over 1,000 kilometers from Komaki.

But for FDA, moving its entire operation to Chubu Centrair would not only mean it would lose Komaki's proximity advantage, but also suddenly put itself in competition with the plethora of LCCs adding services at Nagoya's premier international gateway. Jetstar Japan [GK/JJP] flies both domestic and international routes (Jetstar Japan adds Nagoya and Kansai to Taipei.), while the second AirAsia Japan [DJ] is starting services in April with a hub at Chubu Centrair (New AirAsia Japan receives AOC; takeoff in April 2016.). Overseas LCCs include Spring Airlines [9C/CQH] and V Air [ZV/VAX], while Tigerair Taiwan [IT/TTW] plans to start on January 29th. So for now, FDA's answer to Nagoya is a split hub.

Source: Chunichi Shimbun, 2015 December 23rd. (in Japanese)

Fuji Dream launches Izumo and Kitakyushu.

On March 29th, Fuji Dream Airlines [JH/FDA] launched Izumo [IZO/RJOC] and Kitakyushu [KKJ/RJFR] from its hub at Nagoya/Komaki [NKM/RJNA] (Fuji Dream confirms Izumo and Kitakyushu.) with one and two round-trips, respectively. FDA's eighth and ninth cities from Nagoya's older but more convenient airport near downtown will be flown with either 76-seat Embraer ERJ170-100s (E170s) or 84-seat ERJ170-200s (E175s). All three new flights code-share with partner Japan Airlines [JL/JAL].

Embraer ERJ170-200/STD (E175) JA03FJ Pink was FDA's first 84-seat aircraft. The Komaki-based carrier now operates six alongside three 76-seat ERJ170-100s (E170), with another two E175s on order. (Photo: FDA)

One-way fares to Izumo start from 9,000 JPY booked 45 days in advance and go up to 26,000 JPY for last-minute tickets during peak periods, though a promotional 6,005 JPY-fare is being offered in limited numbers until April 30th. Prices for Kitakyushu range from 11,000 JPY for 45-day-advance tickets to 28,000 JPY for last-minute fares during peak season. A promotional fare is also available until April 30th at 9,990 JPY. Taxes and fuel surcharge are not included in the figures.

Flight Schedule:
Komaki – Izumo NEW 1 daily with E170 or E175. (2015/Mar/29 - Oct/24)
JH415 NKM 1420 – 1520 IZO E70/E75 Daily
JH416 IZO 1550 – 1650 NKM E70/E75 Daily

Komaki – Kitakyushu NEW 2 daily with E170 or E175. (2015/Mar/29 - Oct/24)
JH401 NKM 0720 – 0840 KKJ E70/E75 Daily
JH407 NKM 1820 – 1940 KKJ E70/E75 Daily
JH402 KKJ 0910 – 1030 NKM E70/E75 Daily
JH408 KKJ 2010 – 2130 NKM E70/E75 Daily

ERJ170-200/STD (E175) JA09FJ Gold was assigned to the inaugural flight to Kitakyushu, while ERJ170-200/STD (E175) JA07FJ Yellow operated the first round-trip to Izumo. The former aircraft, which is their ninth, had only arrived in Japan on March 23rd (Fuji Dream's ninth Embraer E-Jet is Gold.) after a four-day-long delivery flight from Brazil.

The niche regional carrier is scheduled to receive its 10th aircraft in March 2016 and 11th in March 2017, however, FDA revealed that opening a base at Nagoya/Chubu Centrair [NGO/RJGG], the region's main international gateway, while keeping Komaki is currently under consideration, as aircraft parking space at the older airport is now full. Besides the two new destinations, FDA currently serves Aomori [AOJ/RJSA], Fukuoka [FUK/RJFF], Hanamaki [HNA/RJSI], Kochi [KCZ/RJOK], Kumamoto [KMJ/RJFT], Niigata [KIJ/RJSN], Yamagata [GAJ/RJSC] from Komaki.

FDA has largely been able to gain popularity for Komaki's compact terminal and proximity to downtown. It essentially filled the void left by JAL subsidiary J-Air [XM/JLJ], which withdrew from Komaki in March 2011. The two new routes were also previously served by JAL's commuter arm until 2005 and 2007, respectively. Although the airline says any Chubu Centrair flight would code-share with JAL, All Nippon Airways [NH/ANA] is the dominant carrier there, and with LCCs Jetstar Japan [GK/JJP] expanding (Jetstar Japan commences Nagoya – Okinawa.) and AirAsia Japan (Mk II) setting up a hub (New AirAsia Japan eyes launch by year-end 2015.), the small commuter carrier could drag itself into a new fare war.

Source: Travel Watch, March 30th. (in Japanese)

Fuji Dream confirms Izumo and Kitakyushu.

Fuji Dream Airlines [JH/FDA] has officially announced the launch of two new routes from Nagoya/Komaki [NKM/RJNA] on March 29th, the beginning of the Summer 2015 timetable: Izumo [IZO/RJOC] and Kitakyushu [KKJ/RJFR]. As previously rumored (Fuji Dream plans Izumo, Kitakyushu, and Chubu Centrair.), the former would be served daily while frequency for the latter would be twice daily. Both routes will code-share with Japan Airlines [JL/JAL].

Embraer ERJ170-100STD (E170) JA01FJ Dream Red prepares for takeoff from Fukuoka. Looking worse for wear, FDA's first aircraft is finally receiving a new coat of paint this month. (Photo: Aviation Wire)

The new flights will be operated by either 76-seat Embraer ERJ170-100s (E170s) or 84-seat ERJ170-200s (E175s). It will coincide with the delivery of their ninth aircraft, which would be their sixth E175, in March. What color the newest airframe will wear remains unannounced.

Flight Schedule (2015/Mar/29 - Oct/24):
Komaki – Izumo NEW 1 daily with E170 or E175.
JH415 NKM 1420 – 1520 IZO E70/E75 Daily
JH416 IZO 1550 – 1650 NKM E70/E75 Daily

Komaki – Kitakyushu NEW 2 daily with E170 or E175.
JH401 NKM 0720 – 0840 KKJ E70/E75 Daily
JH407 NKM 1820 – 1940 KKJ E70/E75 Daily
JH402 KKJ 0910 – 1030 NKM E70/E75 Daily
JH408 KKJ 2010 – 2130 NKM E70/E75 Daily 

Both routes were previously served by JAL subsidiary J-Air [XM/JLJ] until 2005 and 2007, respectively. FDA's network at Nagoya's convenient airport near downtown includes Aomori [AOJ/RJSA], Fukuoka [FUK/RJFF], Hanamaki [HNA/RJSI], Kochi [KCZ/RJOK], Kumamoto [KMJ/RJFT], Niigata [KIJ/RJSN], Yamagata [GAJ/RJSC], and the new cities are their eighth and ninth non-stop destinations.

The niche regional carrier will receive its 10th aircraft in March 2016, however, they revealed that running a base at Nagoya/Chubu Centrair [NGO/RJGG] alongside Komaki is currently under consideration, as apron parking space at the older airport will be full after the arrival of the ninth aircraft. The Aichi Government and local business communities have also been trying to consolidate all Nagoya flights at Chubu Centrair, and further FDA expansion at Komaki would go against that. Adding back flights at its hometown of Shizuoka [FSZ/RJNS] has been talked about, but that does not seem to be high in priority.

However, FDA has largely been able to gain popularity due to them being the sole carrier at Nagoya's more convenient airport near downtown, essentially filling the void left by J-Air. Although the airline says any Chubu Centrair flight would code-share with JAL, All Nippon Airways [NH/ANA] is the dominant carrier there, and with LCCs Jetstar Japan [GK/JJP] expanding (Jetstar Japan starts three routes from Kumamoto.) and AirAsia Japan (Mk II) setting up a hub (AirAsia Japan is officially reborn; first flight June 2015.), the niche commuter carrier could drag itself into a new battleground.

Source: Fuji Dream Airlines, January 15th. (PDF; in Japanese)
Source: Fuji Dream Airlines, January 19th. (PDF; in Japanese)

Fuji Dream plans Izumo, Kitakyushu, and Chubu Centrair.

Fuji Dream Airlines [JH/FDA] is planning to add Izumo [IZO/RJOC] and Kitakyushu [KKJ/RJFR] from its hub at Nagoya/Komaki [NKM/RJNA] from the Summer 2015 timetable starting on March 29th. The latter link would be served twice daily while frequency for the former remains undecided.

Embraer ERJ170-200STD (E175) JA07FJ Yellow arrives at Komaki. (Photo: Ryosuke Yano)

It will coincide with the March delivery of their ninth aircraft, which would be their sixth Embraer ERJ170-200 (E175). Both routes were previously served by Japan Airlines' [JL/JAL] subsidiary J-Air [XM/JLJ] until 2005 and 2007, respectively. For the latter, the Greater Nagoya region and Kitakyushu are significant automobile industry hubs, notably with many of Toyota's factories and related companies located in the two cities, and local businesses had been pushing for the resumption.

FDA continues to expand at Komaki, with a network that covers Aomori [AOJ/RJSA], Fukuoka [FUK/RJFF], Hanamaki [HNA/RJSI], Kochi [KCZ/RJOK], Kumamoto [KMJ/RJFT], Niigata [KIJ/RJSN], and Yamagata [GAJ/RJSC], essentially filling the void left by J-Air. However, FDA revealed that they are considering launching a hub at Nagoya/Chubu Centrair [NGO/RJGG] as well, as their 10th aircraft, which is planned for delivery in March 2016, currently cannot be allocated to Komaki due to limited parking space, and further expansion at Komaki would come against the Aichi Government and local business community's desire to consolidate all flights at Chubu Centrair. A gentleman's agreement also prohibits flights over 1,000 kilometers from Komaki.

FDA has largely been able to gain popularity due to it being the sole carrier at Nagoya's older but more convenient and preferred airport near downtown. Although the airline says any Chubu Centrair flight would also carry the JAL code, All Nippon Airways [NH/ANA] is the dominant carrier there, and with LCCs Jetstar Japan [GK/JJP] expanding (Jetstar Japan starts three routes from Kumamoto.) and AirAsia Japan (Mk II) setting up a hub (AirAsia Japan is officially reborn; first flight June 2015.), the niche regional carrier could drag itself into a new battleground.

Source: San-in Chuo Shimpo, December 20th. (in Japanese)
Source: The Mid-Japan Economist, January 1st. (in Japanese)
Source: Mainichi Shimbun, January 6th. (in Japanese)

Star Flyer offering free tickets for First Sunrise Flight.

Star Flyer [7G/SFJ] will invite 35 pairs (or a group of up to three) to their First Sunrise Flight on January 1st, 2015, dubbed Sunrise Flight 2015. In October, the Kitakyushu [KKJ/RJFR]-based carrier won first place in the domestic long-distance travel category for the Japan Customer Satisfaction Index (JCSI), which is published annually by the Council for Service Productivity & Innovation for Growth (SPRING), and the airline says the flight is an expression of gratitude. It has won the award for six consecutive years.

Airbus A320-214(SL) JA21MC City of Kitakyushu is pushed back at Yamaguchi-Ube on the inaugural day (Star Flyer launches Yamaguchi-Ube.) of the service. (Photo: Aviation Wire)

Sunrise Flight 2015, to be operated by one of their Airbus A320s, will depart Kitakyushu around 0600 JST and fly over Kyushu including Kagoshima's iconic Sakurajima volcano before returning to the airport around 0745. Application began on November 10th and will continue to December 1st through Star Flyer's website or by post, and winners will be contacted by the airline before December 8th. All winners will need to arrange their own transportation to arrive at the airport between 0445 and 0530. Seating will be assigned by the airline.

Reference: Star Flyer, November 9th. (in Japanese)

Star Flyer to start Yamaguchi-Ube in October.

Star Flyer (7G/SFJ), which is undergoing management change and restructuring (Star Flyer's President Shinichi Yonehara to step down.) after posting a whopping 3 billion JPY loss for fiscal year 2013, will reportedly launch Tokyo/Haneda (HND/RJTT) – Yamaguchi-Ube (UBJ/RJDC) from the Winter 2014/2015 schedule starting on October 26th.

Airbus A320-214 JA04MC City of Kitakyushu taxies at rainy Haneda. Delivered in 2007, it will be returned to the lessor this year, reducing the fleet to nine. (Photo: Ryosuke Yano)

Since the Kitakyushu (KKJ/RJFR)-based airline's total number of prized Haneda slots will remain at 27 slot-pairs, two of 10 round-trips between Haneda and Fukuoka (FUK/RJFF) and one of the dozen connecting the capital with Kitakyushu is expected to be suspended to provide room for the three new flight pairs. The other five slot-pairs are currently used for their Osaka/Kansai (KIX/RJBB) service.

However, Sadami Matsuishi, the new President to be sworn in on June 25th (New Star Flyer President is from ANA.), had repeatedly emphasized to Kitakyushu's business community that the airline's hometown would not see cuts, so if local criticism turns out to be strong, Fukuoka could see a third flight cut instead of Kitakyushu. Mr. Matsuishi is a veteran of All Nippon Airways (NH/ANA), a wholly owned subsidiary of ANA Holdings, which controls roughly 18% of Star Flyer's shares. His most recent position has been Chief of Department for Risk Management at IBEX Airlines (FW/IBX).

Meanwhile, ANA plans to code-share with Star Flyer on all three new flights and instead reduce flying their own metal on three of their five daily round-trips. This effectively frees up three of ANA's slot-pairs at Haneda, which sparks speculation about where ANA plans to use these precious slots to. The code-share allows Star Flyer to have a stable income from the now de facto parent while for ANA it could transfer second-tier routes to a (slightly) lower-cost partner and free-up Haneda slots at the same time. Operating under a similar scheme are Star Flyer's three Nagoya/Chubu Centrair (NGO/RJGG) – Fukuoka (FUK/RJFF) round-trips (Star Flyer to add ANA's code on all flights.), launched on March 30th, which replaced three of ANA's.

Now in its eighth year of service, Star Flyer's heavy losses not only stem from high costs (Cost of Available Seat-Kilometer, or CASK, was 11.8 JPY for FY2011), a depreciated JPY (same as everyone else), and LCC competition, but also from critical strategy errors. Last spring, it dumped all of its five new slot-pairs awarded at Haneda on the Fukuoka route, a high-demand link but also one of the most highly-contested. Load factors went up, but prices went down and hurt the all-important yield.

Star Flyer initially touted (and still does) itself as an affordable high-quality domestic airline, boasting Airbus A320s with only 150 seats, providing audio visual on-demand (AVOD) at every seat (the only domestic airline to do so), as well as serving Tully's-branded coffee accompanied by chocolate for free. However, with heavy losses and ANA's increased involvement, it is becoming merely another pawn of ANA, joining the likes of AIRDO (HD/ADO) (d.b.a. Air Do), IBEX Airlines, and Skynet Asia Airways (6J/SNJ) (d.b.a. Solaseed Air).

Source: Mainichi Shimbun, June 13th. (in Japanese)

New Star Flyer President is from ANA.

As rumored last week (Star Flyer's President Shinichi Yonehara to step down.), Star Flyer on February 28th announced that Shinichi Yonehara is resigning from his role as President of the Kitakyushu (KKJ/RJFR)-based airline on March 31st. An All Nippon Airways (NH/ANA) veteran and former head of IBEX Airlines' (FW/IBX) Department for Risk Management Sadami Matsuishi is expected to succeed his position.

Airbus A320-214 JA05MC 'City of Kitakyushu' taxiing in the Haneda morning sun. (Photo: Ryosuke Yano)

Star Flyer is expected to post a whopping 3.3 billion JPY loss for fiscal year 2013. Mr. Yonehara told during the press conference that he made the decision on his own, and that it was approved at a Board of Directors' meeting in February. "It's our first loss since we started operations, but a big one. 80 employees had to leave the company (as part of a restructuring plan to reduce costs) and I feel painful. I felt I need to take responsibility", he added. Mr. Yonehara is expected to remain with the carrier until at least June as Advisor, a ceremonial position. Meanwhile, Makoto Takahashi, Associate Senior Corporate Executive Officer, will be Acting President until the new leader is installed.

Mr. Yonehara (right) and Mr. Takahashi (left). (Photo: Aviation Wire)

60-year-old Mr. Matsuishi started his career with ANA in 1975 and eventually became ANA Operations Director. During his tenure, he was also briefly Vice President at Skynet Asia Airways (6J/SNJ) (d.b.a. Solaseed Air), and from March 2012 has been with IBEX Airlines, also an ANA feeder carrier. ANA Holdings currently owns 17.96% of Star Flyer, and effective March 30th, all services will code-share with ANA. It joins AIRDO (HD/ADO) (d.b.a. Air Do) (now 14% controlled by ANA) and Solaseed Air (now 12% controlled by ANA), which along with Star Flyer were new entrants born after deregulation to challenge the ANA/JAL duopoly, in becoming merely a feeder carrier for ANA. Skymark Airlines (BC/SKY) is now the only post-deregulation homegrown carrier truly independent from the mighty two.

Source: Yomiuri Shimbun, February 28th. (in Japanese)
Source: Aviation Wire, February 28th. (in Japanese)

Star Flyer's President Shinichi Yonehara to step down.

Rumors are circulating that Star Flyer's (7G/SFJ) current President Shinichi Yonehara has decided to resign from his position. Yomiuri Shimbun along with other media all reported the news on February 19th. It was denied by the airline the following day, but several sources close to the President are telling that other executives have already been informed about the matter.

Airbus A320-214 JA08MC 'Heart of Kitakyushu' taxies at Haneda. (Photo: Ryosuke Yano)

Star Flyer is expected to post a staggering 3.3 billion JPY loss for fiscal year 2013 ending in March. Their all-Airbus A320 fleet will be reduced to nine, executives have already taken 15-30% salary cuts, and the company has cut about 10% of its workforce through early voluntary retirements. The carrier blames higher fuel costs due to the rapid devaluation of the Japanese Yen (JPY) as well as increased competition from LCCs, but that's just a tip of an iceberg. 

As part of restructuring, they are axing the four-times daily Osaka/Kansai (KIX/RJBB) - Fukuoka (FUK/RJFF) service after February 19th as well as their double-daily Kitakyushu (KKJ/RJFR) - Busan/Gimhae (PUS/RKPK) route, their sole but highly unprofitable international service, after March 29th. Star Flyer touts itself as Kitakyushu's hometown airline with its headquarters and maintenance center based there, but most of its routes are to and from the big cities of Fukuoka, Osaka, and Tokyo. Last spring, it put all of its five slot-pairs newly awarded at Tokyo/Haneda (HND/RJTT) on the Haneda - Fukuoka route, a high-demand route but at the same time one of the most highly-contested. Load factors went up, but prices went down and hurt the all-important yield.

Meanwhile, Star Flyer's Haneda - Kansai route, which constantly sees load factors around 70%, is not helping the balance sheet either. As many as 130 of the 150 seats per flight are sold by All Nippon Airways (NH/ANA), which puts its code on these flights, and Star Flyer is being forced to sell these seats to ANA at "unfavorably low prices", according to close sources. Soon they will have ANA's code on code on all flights; the 'NH' code will be placed on all of its 10 Haneda - Fukuoka round-trips on February 1st, as well as the three-times-daily Nagoya/Chubu Centrair (NGO/RJGG) - Fukuoka route which will commence on March 30th. "ANA basically forced Star Flyer to start taking over another unprofitable (at ANA's costs) route", cite a source who preferred not to be named.

Unlike competing LCCs which cram 180 seats on the A320, Star Flyer only has 150; they have boasted 'high-quality domestic economy', providing audio visual on-demand (AVOD) at every seat, the only domestic airline to do so, as well as serving Tully's-branded coffee accompanied by chocolate for free. But these features will not stand out soon, as Skymark will put in all-premium Airbus A330s into service on the Haneda - Fukuoka route and sells these seats at prices often even cheaper than ANA and Japan Airlines' (JL/JAL) economy.

ANA Holdings owns 17.96% of Star Flyer, and rumors have it that an ANA veteran will be installed as new President. Can Star Flyer find a niche? Or will it become merely a feeder carrier for ANA operating routes that would be unprofitable at ANA's costs? 

Source: Yomiuri Shimbun, February 19th. (in Japanese)
Source: Aviation Wire, February 21st. (in Japanese)

Star Flyer returns second Airbus A320 to lessor.

On the morning of February 14th, Star Flyer's (7G/SFJ) second aircraft, Airbus A320-214 JA02MC, left Japan. It departed the airline's base at Kitakyushu (KKJ/RJFR) as flight 7G9201 and arrived at Manila's Ninoy Aquino International Airport (MNL/RPLL) later that day for final maintenance checks prior to its return to lessor GECAS. JA02MC was delivered new to Star Flyer on January 28, 2006.

Airbus A320-214 JA02MC at rainy Haneda Airport in May 2011. (Photo: Ryosuke Yano)

This leaves only one more 144-seat A320 in the fleet, while others seat 150 passengers. The last, JA04MC, will also be retired after Star Flyer suspends Kitakyushu - Busan/Gimhae (PUS/RKPK), its sole but unprofitable international route, effective March 30th. As part of their restructuring, the low-fare premium carrier is reducing its fleet to nine. Three more A320s were planned for arrival during 2014 - 2015 but deliveries have been indefinitely deferred.

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.

Star Flyer takes 13th Airbus A320.

Star Flyer's (7G/SFJ) 13th aircraft, Airbus A320-214(SL) JA23MC, arrived at the airline's base of Kitakyushu (KKJ/RJFR) from Toulouse as flight 7G5931 on January 24th. Configured with 150 seats, 'Spirit of Kitakyushu' was handed over on January 20th. It is the fourth sharklet-equipped A320 in their fleet. Star Flyer's fleet now stands at 11, as two older A320s have already been returned to their lessors.

Airbus A320-214 JA08MC, Star Flyer's 8th aircraft, at Kitakyushu. (Photo: Aviation Wire)

In other news, Star Flyer has managed to find 26 voluntary retirements, reducing the number of employees to 660, as part of the current restructuring plan. They will also suspend all four daily Osaka/Kansai (KIX/RJBB) - Fukuoka (FUK/RJFF) round-trips after February 19th, followed by their double daily Kitakyushu - Busan/Gimhae (PUS/RKPK) route, their sole international service, after March 29th, and reduce the fleet to nine A320s. Its eight executives have taken 15-30% salary cuts. Meanwhile, the airline will start placing All Nippon Airways' (NH/ANA) code on all of its 10 Tokyo/Haneda (HND/RJTT) - Fukuoka round-trips on February 1st, as well as on all three of its new Nagoya/Chubu Centrair (NGO/RJGG) - Fukuoka flights to be launched on March 30th. Star Flyer is owned 17.26% by ANA Holdings.

AirAsia targets 2015 for new Japan venture.

AirAsia (AK/AXM) is close to restarting plans for a Japanese unit, according to the group's director Tony Fernandes. In an interview in London on January 17th, he revealed that new local partners have been found, and that the airline would launch in 2015. It will be more than one year from now, partly for the group to focus on starting up AirAsia India, the launch date of which could be delayed again from March, due to authorization issues. 

AirAsia Japan (Mk I) Airbus A320-216(SL) JA04AJ is now in Malaysia as 9M-AQX. (Photo: Aviation Wire)

The Malaysian LCC's first Japanese venture AirAsia Japan (JW/WAJ) ended in a divorce with partner ANA Holdings, parent of All Nippon Airways (NH/ANA), only 10 months after launching operations in August 2012, due to disagreements over how the airline would be run. AirAsia Japan ceased operations on October 26th, 2013, and re-launched as Vanilla Air (JW/VNL) under 100% ANA control on December 20th.

AirAsia erred in giving majority control to ANA (67%), but foreign ownership of Japanese airlines are capped at 33%, and an unspoken rule had it that the carrier must not be 'de facto' controlled by a foreign entity, effectively forcing new entrants to team-up with existing Japanese airlines. But times seem to be changing, with Spring Airlines Japan (SJO) becoming the first foreign-led newcomer not affiliated with an existing Japanese carrier to receive an operating certificate. Chinese LCC Spring Airlines (9C/CQH) made sure it retains the biggest share, at 33%. This should be encouraging news for Mr. Fernandes, who promised to come back to the world's third largest domestic market.

Mr. Fernandes has ruled out a Tokyo/Narita (NRT/RJAA) base outright, calling the slot-restricted and curfew-plagued airport where his first venture "should never have been". Rumors have it that a 24-hour airport in western Japan would be selected as its operating hub... there are only four; Nagoya/Chubu Centrair (NGO/RJGG), Osaka/Kansai (KIX/RJBB), Kitakyushu (KKJ/RJFR), and Okinawa/Naha (OKA/ROAH).

Source: Bloomberg (in English)

Star Flyer to add ANA's code on all flights.

Star Flyer (7G/SFJ) will code-share with All Nippon Airways (NH/ANA) on all three of their new daily Fukuoka (FUK/RJFF) - Nagoya/Chubu Centrair (NGO/RJGG) flights, which will be launched on March 30th. This will result in the carrier code-sharing with ANA on all of its flights.

Star Flyer's Airbus A320-214 JA08MC at Fukuoka in October 2013. (Photo: Ryosuke Yano)

In November, Star Flyer announced that fiscal year 2013 will likely result in at least a 1.74 billion JPY loss, forcing the carrier to restructure its operations. Its system-wide load factor from April through September was 63.8%. As a result, they are axing the four-times daily Osaka/Kansai (KIX/RJBB) - Fukuoka (FUK/RJFF) service after February 19th as well as their double-daily Kitakyushu (KKJ/RJFR) - Busan/Gimhae (PUS/RKPK) route, their sole international service, after March 29th. Two additional Airbus A320-200s will be returned to lessors, which would bring the fleet down to nine. Its eight executives took 15-30% salary cuts, and the company is looking for 30 voluntary retirements. Meanwhile, it will start placing ANA's code on all of its 10 Tokyo/Haneda (HND/RJTT) - Fukuoka round-trips on February 1st. ANA Holdings owns 17.26% of Star Flyer.

One of a handful of carriers born after de-regulation, Star Flyer tried to operate high-quality service from its hub at Kitakyushu with Airbus A320s equipped with audio-visual-on-demand (AVOD) at every seat and accommodating only 144 passengers. However, instead of carving out a niche, it will soon be not much more than a feeder carrier for ANA, as is the case with AIRDO (HD/ADO) (d.b.a. Air Do) and Skynet Asia Airways (6J/SNJ) (d.b.a. Solaseed Air). ANA is decreasing service on the Chubu Centrair - Fukuoka route from nine to six after Star Flyer commences the route.

Source: Yomiuri Shimbun (in Japanese)

AirAsia finds new partners in Japan?

On December 19th, AirAsia (AK/AXM) director Tony Fernandes mentioned on Twitter that he had found partners for a new Japanese venture.

Their first Japanese venture AirAsia Japan (JW/WAJ) ended in a divorce with partner ANA Holdings, parent of All Nippon Airways (NH/ANA), only 10 months after launching operations in August 2012. AirAsia Japan ceased operations on October 26th and re-launched as Vanilla Air (JW/VNL) under 100% ANA ownership one day after the Twitter message.

The Japanese version of AirAsia's website has been posting this. (Image: AirAsia)

At that time, AirAsia blamed ANA's high-cost tactics and interference so that it would not cannibalize ANA's main-line profits, and ANA blamed AirAsia's unwillingness to make changes to the Malaysian reservations system, which was unpopular with the Japanese, as well as come up with alternative distribution channels. There were basic structural issues as well; a majority 67% of shares were controlled by ANA and the rest by AirAsia, all executives were appointed by ANA, its base was at slot-restricted and curfew-plagued Tokyo/Narita (NRT/RJAA), it flew some former ANA routes that could no longer be profitable at ANA's costs, but operated with AirAsia's livery, planes, and reservations system. After all, ANA has the highest cost base in the world at 11.71 US cents per available seat kilometres (ASKs) whereas AirAsia has the lowest with a cost per ASK (CASK) of 4.4 US cents in Malaysia. Tony Fernandes described the failure "it’s like a homosexual and a straight guy going to bed".

Does AirAsia have the right partners and recipe this time? Rumors have it that they are looking at setting up a base at a 24-hour airport in western Japan... there are only four; Nagoya/Chubu Centrair (NGO/RJGG), Osaka/Kansai (KIX/RJBB), Kitakyushu (KKJ/RJFR), and Okinawa/Naha (OKA/ROAH).

Source: Tony Fernandes @ Twitter (in English)