Spring Japan posts heavy loss but mulls Asia expansion.

Spring Airlines Japan [IJ/SJO] reported a 4.92 billion JPY loss for 2014. Total revenue was 836 million JPY, operating loss stood at 4.89 billion JPY, while its ordinary loss was 4.94 billion JPY. In December, largest shareholder Spring Airlines [9Q/CQH] injected 900 million JPY in the form of third-party allocation of non-voting stocks, raising total capital to 6.9 billion JPY (Spring Japan receives 900 million JPY injection.). The Japanese unit of China's biggest LCC only started operations last August (Spring Airlines Japan commences operations.).

Boeing 737-86N(WL) JA02GR taxies for departure from Narita. Original plans called for adding five new aircraft each year to reach 20 by 2017, however, all new deliveries seem to have been postponed indefinitely. (Photo: Aviation Wire)

From its Tokyo/Narita [NRT/RJAA] hub using a small fleet of three 189-seat Boeing 737-800s, Spring Japan currently flies double-daily to Hiroshima [HIJ/RJOA], daily to Saga [HSG/RJFS], and four times weekly to Takamatsu [TAK/RJOT]. These secondary routes are still unprofitable, except maybe for Hiroshima. On April 8th, it moved into Narita's Terminal 3, which is dedicated for LCCs (Narita opens Tokyo's LCC gateway: Terminal 3.).

Japan's youngest operating LCC has talked of launching international flights to China by the end of this year (Spring Japan cuts flights but hopeful for China in 2015.) with Chongqing [CKG/ZUCK], Lanzhou [LHW/ZLLL], and Wuhan [WUH/ZHHH] to become its initial destinations (Spring Japan considering Chongqing and Wuhan.). In addition, parent Spring Airlines' CEO Zhang Xiuzhi revealed in March that Hong Kong, Macau, South Korea, Taiwan, and Southeast Asia are also on Spring Japan's radar, with Osaka/Kansai [KIX/RJBB] and Sapporo/New Chitose [CTS/RJCC] (Spring Japan eyes Sapporo and China in 2015.) on the wishlist for domestic cities.

However, Spring Japan's original mission had been to tap into secondary Chinese cities catering to mostly Chinese tourists traveling to Japan, with much less emphasis on Japan's domestic market. And with parent Spring Airlines now setting up its own hub at Kansai, envisioning 100 weekly flights serving 20 Chinese cities and basing 10 aircraft by 2020, they may not feel the need to tolerate the Japanese unit's red ink after all, especially if they deem the domestic market unimportant. System-wide average booking rate for the upcoming Golden Week peak travel period is a pale 57.6% so far. Will Spring Japan be able to live up to its ambitions?

Source: Aviation Wire, March 3rd. (in Japanese)
Source: Aviation Wire, April 8th. (in Japanese)
Source: Spring Airlines Japan, April 24th. (in Japanese)

Spring Japan cuts flights but hopeful for China in 2015.

Spring Airlines Japan [IJ/SJO] has released its Summer 2015 timetable, effective March 29th, which sees no new routes but a reduction of Tokyo/Narita [NRT/RJAA] – Takamatsu [TAK/RJOT] from daily to four-times weekly. It will maintain their twice-daily service to Hiroshima [HIJ/RJOA] and a daily flight to Saga [HSG/RJFS]. Meanwhile, regional international routes to China (Spring Japan eyes Sapporo and China in 2015.), which were planned for Summer 2015, are now targeted "by year-end 2015," according to officials of Japan's latest LCC.

Boeing 737-86N(WL) JA03GR is the third aircraft in Spring Japan's tiny fleet. Two, including this aircraft, are leased from GECAS, while the other is leased from AWAS. (Photo: Aviation Wire)

Frequency for the Takamatsu service was reduced due to "load factors much lower than anticipated," according to the official. They had originally targeted 80% and had plans to make it double-daily. Rival LCC Jetstar Japan [GK/JJP] competes on the same route with two daily round-trips. From March 29th, Spring Japan will operate the service four days a week, on the same days when Chinese parent Spring Airlines [9C/CQH] flies in from Shanghai/Pudong [PVG/ZSPD] to the Shikoku airport, to raise brand awareness.

System Flight Schedule:
Narita – Hiroshima 2 daily with 737-800. (Mar/29 - May/31)
IJ621 NRT 0850 – 1030 HIJ 73H Daily
IJ623 NRT 1655 – 1835 HIJ 73H Daily
IJ622 HIJ 1115 – 1245 NRT 73H Daily
IJ624 HIJ 1920 – 2050 NRT 73H Daily

Narita – Saga 1 daily with 737-800. (Mar/29 - May/31)
IJ601 NRT 1125 – 1340 HSG 73H Daily
IJ602 HSG 1425 – 1610 NRT 73H Daily

Narita – Takamatsu reduced from 7 to 4 weekly with 737-800. (Mar/29 - May/31)
IJ611 NRT 0700 – 0830 TAK 73H Tu/Th/Fr/Su
IJ612 TAK 0915 – 1040 NRT 73H Tu/Th/Fr/Su

Spring Japan's first international routes, which will be regional flights to China, have been delayed and are now planned by the end of 2015. Chongqing [CKG/ZUCK], Lanzhou [LHW/ZLLL], and Wuhan [WUH/ZHHH] are currently being considered (Spring Japan considering Chongqing and Wuhan.), according to the official. The fledgling carrier has started recruiting more cockpit crew, and is calling for 10 pilots at this time. It currently has 15 captains and 12 first officers, and before the end of FY2014 intends to begin training to promote first officers to captains.

Meanwhile, the so-far unprofitable Japanese arm of China's largest LCC group was recapitalized in December with an injection of 900 million JPY from an unnamed source (Spring Japan receives 900 million JPY injection.). However, considering it was raised by issuing new non-voting stocks, the investor is most likely parent Spring Airlines. Spring Japan only launched operations last August (Spring Airlines Japan commences operations.), with the aim of connecting secondary Chinese cities with Japan.

Original plans called for adding five aircraft each year, however, the fleet will be kept at three Boeing 737-800s at least through FY2015 even after it starts international services.

Source: Spring Airlines Japan, January 30th. (in Japanese)
Source: Traicy, February 3rd. (in Japanese)
Source: Aviation Wire, February 3rd. (in Japanese)