Thursday, August 28, 2014

JAL orders 32 Mitsubishi MRJs and 27 Embraer E-Jets.

On August 28th, Japan Airlines (JL/JAL) and Mitsubishi Aircraft jointly announced that they had reached a Memorandum of Understanding (MoU) for the airline to acquire 32 Mitsubishi Regional Jets (MRJs) with deliveries starting in 2021. It will be operated by JAL's commuter arm J-Air (XM/JLJ). The order is valued at 150 billion JPY at list prices.
Mitsubishi Regional Jet (MRJ) in JAL's livery. (Image: Mitsubishi)

At the same time, Japan's second largest carrier also reached an agreement with Embraer for 27 E-Jets, including 15 firm and 12 options. Both the 78-seat ERJ170 (E170), which the currently operates, and the larger 104-seat ERJ190 (E190), which would be a new variant for the airline, were announced, though the breakdown was not specified. Deliveries will start in 2015. J-Air already flies 15 E170s.
Embraer E-Jets in J-Air's livery. The ERJ190 (E190) would be a first for the group. (Image: Embraer)

"I've also taken a look at MRJs factory, and with a new Japanese-built aircraft in front, I was filled with deep emotions. I'm confident that it would be the aircraft for the next generation," said Yoshiharu Ueki, President of JAL. He explained that the order for Brazilian regional jets are a stop-gap measure, probably to replace the Bombardier/Canadair CRJs, and the regional fleet would eventually be standardized on the MRJ, sometime around 2028.

Although plagued by delays, the prototype MRJ will finally be rolled out on October 18th at Mitsubishi's plant at Nagoya/Komaki (NKM/RJNA), with first flight slated for April or May 2015. First delivery to launch customer All Nippon Airways (NH/ANA), which has 25 on order, is expected in 2017. Powered by Pratt & Whitney's PurePower PW1200G series geared turbofan engines, the MRJ family consists of the 78-seat MRJ70, which can fly 3,380 kilometers (2,100 miles), and the 92-seat MRJ90, with a 3,310-kilometer (2,050 miles) range. It is Japan's first commercial airliner since the NAMC YS-11 was introduced in 1965.

Reference: Japan Airlines, August 28th. (in Japanese)
Reference: Japan Airlines, August 28th. (in Japanese)
Reference: Japan Airlines, August 28th. (in Japanese)

Tuesday, August 26, 2014

ANA to operate charter to Ulan Baatar.

All Nippon Airways (NH/ANA) will operate a one-time charter flight from Tokyo/Narita (NRT/RJAA) to Ulan Baatar/Chinggis Khaan (ULN/ZMUB) and back using their Boeing 737-700ER. The outbound flight will operate on August 28th, and the return leg will be operated on August 31st. It is being chartered by ANA Holdings' travel agency ANA Sales as part of a four-day Mongolia package tour, and seats are not being offered otherwise.
Boeing 737-781 JA16AN taxies at Fukuoka. (Photo: Ryosuke Yano)

The airline's sole 38-seat all-business 737-781/ER JA13AN will be assigned for the service. Along with the other 737-700ER, JA10AN, which is configured with 24 business and 20 economy class seats, the aircraft normally plies the daily Narita – Mumbai/Chhatrapati Shivaji (BOM/VABB) service.

Flight Schedule:
Narita – Ulan Baatar charter with 737-700ER.
NH1971 NRT 1215 – 1630 ULN 73W Aug/28
NH1972 ULN 1010 – 1630 NRT 73W Aug/31

ANA has been looking into the Mongolian market for some time, with a potential scheduled service linking the two countries. Government-owned MIAT Mongolian Airlines (OM/MGL) is currently the sole carrier in the market with four-times-weekly service from the capital to Narita and twice weekly to Osaka/Kansai (KIX/RJBB), both flown by 737-800s. In May 2011, ANA entered into a strategic partnership with local private carrier Eznis Airways (ZY/EZA) including cooperation over management and operations, however, the carrier suspended operations in May 2014.

Launched in January 2006 with an order conversion for two airplanes from ANA, the 737-700ER is essentially the commercial version of the Boeing Business Jet (BBJ), with the 737-700 fuselage joined by wings and landing gear of the 737-800, along with a strengthened body and auxiliary fuel tanks. It flies up to 10,200 kilometers (6,340 miles), or 3,970 kilometers (2,470 miles) farther than a normal 737-700. The first was delivered in February 2007, and ANA remains the only customer for the variant so far.

Reference: All Nippon Airways, July 1st. (in Japanese)

Monday, August 25, 2014

Solaseed Air to retire Boeing 737-400 on September 29th.

Skynet Asia Airways (6J/SNJ), doing business as Solaseed Air, will retire the Boeing 737-400 on September 29th, with the last revenue flight currently planned to be flight 6J090, service from Oita (OIT/RJFO) to Tokyo/Haneda (HND/RJTT). The stretched variant of the second generation 'Baby Boeing' was the first type to be flown by the airline when they launched on August 1st, 2002, with Haneda – Miyazaki (KMI/RJFM).
Boeing 737-46Q JA737B awaiting its next flight at Tokyo's Haneda. (Photo: Ryosuke Yano)

For September, the 737-400 is scheduled for just three round-trips: Haneda – Nagasaki (NGS/RJFU), Haneda – Oita, and Haneda – Kumamoto (KMJ/RJFT). Two of the type remain in service: 737-46Q JA737B and 737-46M JA392K. The former started out its carrier with now-defunct Istanbul Airlines (IL/IST) as TC-IAB in June 1998, while the latter was first delivered to Virgin Express (TV/VEX) as OO-VED in January 1997.

Boeing 737-400 Flight Schedule:
Haneda – Nagasaki 1 of 4 daily operated with 737-400.
6J031 HND 0650 – 0840 NGS 734 Daily *Until Sep/29.
6J034 NGS 0910 – 1055 HND 734 Daily *Until Sep/29.

Haneda – Oita 1 of 4 daily operated with 737-400.
6J091 HND 1215 – 1350 OIT 734 Daily *Until Sep/29.
6J090 OIT 1425 – 1555 HND 734 Daily *Until Sep/29. Last revenue flight.

Haneda – Kumamoto 1 of 5 daily operated with 737-400.
6J017 HND 1630 – 1810 KMJ 734 Daily *Until Sep/28.
6J022 KMJ 1845 – 2025 HND 734 Daily  *Until Sep/28.

The company's 11th 737-800 is expected to be delivered in September, however, their schedule from October only calls for 10 737-800s, so the 11th will be used as back-up equipment. Solaseed will receive their 12th in May 2015, which will coincide with an expansion of their network, the details of which will be announced this autumn. It will most likely be a 'transfer' of less profitable routes from de facto parent ANA Holdings' subsidiary All Nippon Airways (NH/ANA). ANA Holdings holds a 8.56% stake in Solaseed.

I was fortunate enough to fly on JA737B last year (CoachFlyer 6J034: NGS - HND on Solaseed Air's Boeing 737.). After Solaseed Air retires the 737-400, Japan Transocean Air (NU/JTA) will be the sole Japanese operator of the variant with a dozen, though that fleet too will be replaced by 737-800s starting in January 2016 (JTA finalizes order for 12 Boeing 737-800s.). Catch them while you can!

Reference: FlyTeam, August 25th. (in Japanese)

Saturday, August 23, 2014

JAL to terminate Narita – Okinawa.

Japan Airlines (JL/JAL) has released their Winter 2014/2015 timetable, effective October 26th, 2014 through March 28th, 2015. It includes axing of the once-daily Tokyo/Narita (NRT/RJAA) – Okinawa/Naha (OKA/ROAH) service, which is mostly aimed at connecting passengers for their international flights to and from Narita.
Boeing 777-346 JA8945 moments before touchdown at Okinawa's Naha Airport. (Photo: Ryosuke Yano)

Meanwhile, Japan's second largest carrier will adjust capacity on other routes during the winter months. Tokyo/Haneda (HND/RJTT) to Izumo (IZO/RJOC) and Kumamoto (KMJ/RJFT) will see frequency increases from five to six and eight to nine, respectively, while Fukuoka (FUK/RJFF) to Amami (ASJ/RJKA), Izumo, Matsuyama (MYJ/RJOM), and Miyazaki (KMI/RJFM) will all see one of its flights being cut.

Frequency Increases (DOMESTIC):
Haneda – Izumo from 5 to 6 daily.
Haneda – Kumamoto from 8 to 9 daily.

Frequency Reductions (DOMESTIC):
Fukuoka – Amami from 2 to 1 daily.
Fukuoka – Izumo from 3 to 2 daily.
Fukuoka – Matsuyama from 6 to 5 daily.
Fukuoka – Miyazaki from 10 to 9 daily.

Suspensions (DOMESTIC):
Narita – Naha 1 daily.

Currently, the once-daily Narita – Naha service operates with a 261-seat (42 Class J and 219 economy) Boeing 767-300. Load factors for the route for April - June last year hovered around 40 - 50%, however, it recorded 22.2% (down 20.2% from last year) for April this year, 25.3% (down 24.5% from last year) for May, and 32.3% (down 25.5% from last year) for June. Competition with Narita-based LCCs Jetstar Japan (GK/JJP), in which JAL owns a minority stake, and Vanilla Air (JW/VNL) has significantly increased. JAL's international-connecting passengers will still be able to book the route as a code-share with Jetstar Japan, which operates up to four daily round-trips.

JAL's international plans for Winter 2014/2015, including the anticipated resumption of the Osaka/Kansai (KIX/RJBB) – Los Angeles (LAX/KLAX) route (JAL to resume Kansai – Los Angeles in Winter 2014/2015.), will be announced at a later date.

Reference: Japan Airlines, August 20th. (in Japanese)
Reference: Aviation Wire, August 20th. (in Japanese)

Friday, August 22, 2014

Fuji Dream to go daily on Shizuoka – Kagoshima.

On August 20th, Fuji Dream Airlines (JH/FDA) announced their Winter 2014/2015 schedule, effective October 26th. Shizuoka (FSZ/RJNS) – Kagoshima (KOJ/RJFK) will be upgraded to a daily service, while flights to the snowy north will be reduced, with Nagoya/Komaki (NKM/RJNA) – Aomori (AOJ/RJSA) to be cut from three to two round-trips, and the four-times-weekly Shizuoka – Sapporo/New Chitose (CTS/RJCC) service suspended until summer next year.
Embraer ERJ170-100STD (E170) JA02FJ Light Blue at Fukuoka. (Photo: Aviation Wire)

Frequency Increases:
Shizuoka – Kagoshima from 4 to 7 weekly.

Frequency Reductions:
Komaki – Aomori from 3 to 2 daily.

Shizuoka – New Chitose 4 weekly. *To resume on Mar/29.  

The New Chitose round-trip from Shizuoka code-shares with Japan Airlines (JL/JAL), competing with All Nippon Airways' (NH/ANA) year-round daily flight operated by Boeing 737-800s.

Reference: Fuji Dream Airlines, August 20th. (PDF; in Japanese)

Thursday, August 21, 2014

ANA releases Winter 2014/2015 schedule.

On August 20th, All Nippon Airways (NH/ANA) released their Winter 2014/2015 timetable, effective October 26th. The only new route being announced is Tokyo/Haneda (HND/RJTT) – Nagoya/Chubu Centrair (NGO/RJGG) (ANA to resume Haneda – Nagoya in October.), timed to feed their expanded international network at Haneda (ANA's Summer 2014 international expansion.).
Boeing 767-381 JA602A in the Mohican Blue livery used by ANA from May 1969 until March 1989. It was revived as a retro-jet on December 1st, 2009, and completed operations in this special scheme on August 11th, 2014 with NH638, service from Iwakuni to Haneda. It will revert to the current Triton Blue livery. (Photo: Luke H. Ozawa/ANA)

For domestic, other changes include frequency increases from Haneda to Ishigaki (ISG/ROIG), Okayama (OKJ/RJOB), and Okinawa/Naha (OKA/ROAH), and from Fukuoka (FUK/RJFF) to Osaka/Itami (ITM/RJOO) and Naha. Meanwhile, reductions include the Haneda – Yamaguchi-Ube (UBJ/RJDC) route (Star Flyer to add Yamaguchi-Ube; but reduce Fukuoka.), with capacity de facto transferred to partly-owned subsidiary Star Flyer (7G/SFJ) to free up some of ANA's Haneda slots.

New Routes/Resumptions (DOMESTIC):
Haneda – Chubu Centrair NEW 1 daily with 737-800.
NH85 HND 1825 – 1930 NGO 73H Daily *From Oct/26.
NH86 NGO 0750 – 0850 HND 73H Daily *From Oct/26.

Frequency Increases (DOMESTIC): 
Fukuoka – Naha from 8 to 9 daily.
Itami – Fukuoka from 5 to 7 daily.
Haneda – Ishigaki from 1 to 2 daily. *From Feb/1.
Haneda – Okayama from 5 to 6 daily.
Haneda – Naha from 10 to 11 daily.

Frequency Reductions (DOMESTIC):
Itami – Naha from 3 to 2 daily.
Itami – New Chitose from 4 to 3 daily. 
Sendai – New Chitose from 4 to 3 daily.
Haneda – Yamaguchi-Ube from 5 to 3 daily.

For international, there's not much change, with the Tokyo/Narita (NRT/RJAA) – Chengdu (CTU/ZUUU) route seeing a reduction, except for the Chinese New Year period. However, there are equipment swaps between Boeing 767s, 787s, and 777s for regional Asian routes. Popular Taiwan will see all Haneda – Taipei/Songshan (TSA/RCSS) flights operating with the larger 787-8, while Haneda – Manila (MNL/RPLL) will be downsized to 767-300ERs. Haneda – Seoul/Gimpo (GMP/RKSS) will see 14 weekly round-trips being downsized to the 787-8 from the 777-200ER, while Haneda – Shanghai/Pudong (PVG/ZSPD) will see half of its 14 weekly round-trips up-gauged from the 787-8 to the 777-200ER.

Frequency Reductions (INTERNATIONAL):
Narita – Chengdu from 7 to 4 weekly. *7 weekly Feb/13 - 28.

ANA says they will continue to strengthen their Tokyo dual hubs at Haneda and Narita. Japan's largest carrier wants to capture Asia – North America connections at Narita, while Haneda will pursue the Tokyo/domestic – international market.

Reference: All Nippon Airways, August 20th. (in Japanese)

Wednesday, August 20, 2014

Jetstar Japan to launch Kumamoto with three routes.

On August 20th, Jetstar Japan (GK/JJP) announced that they will add Kumamoto (KMJ/RJFT), their 11th destination and fourth city in Kyushu, to their growing network from October 26th, the start of the Winter 2014/2015 timetable. Twice daily flights will be operated each to and from Nagoya/Chubu Centrair (NGO/RJGG), Osaka/Kansai (KIX/RJBB), and Tokyo/Narita (NRT/RJAA) using 180-seat Airbus A320s.
Airbus A320-232 JA05JJ being pushed back by JAL's ground handling at Fukuoka. (Photo: Ryosuke Yano)

To promote the inauguration, the Japanese unit of the Australian LCC will sell 99 seats on each flight on the three new routes for an eye-catching 99 JPY for travel between October 26th and December 4th. Tickets will go on sale on August 21st at 1630 JST.

Flight Schedule:
Narita – Kumamoto NEW 2 daily with A320-200.
GK611 NRT 0620 – 0820 KMJ 32A/320 Mo/Fr/Sa/Su *Oct/26 - Dec/15, Jan/9 - Feb/16.
GK611 NRT 0620 – 0820 KMJ 32A/320 Daily *Dec/19 - Jan/5, Feb/20 - Mar/28.
GK613 NRT 0820 – 1020 KMJ 32A/320 Tu/We/Th *Oct/28 - Dec/18, Jan/6 - Feb/19.
GK615 NRT 1345 – 1550 KMJ 32A/320 Daily
GK610 KMJ 1245 – 1430 NRT 32A/320 Mo/Fr/Sa/Su *Oct/26 - Dec/15, Jan/9 - Feb/16.
GK610 KMJ 1245 – 1430 NRT 32A/320 Daily *Dec/19 - Jan/5, Feb/20 - Mar/28.
GK612 KMJ 1430 – 1615 NRT 32A/320 Tu/We/Th *Jan/6 - Feb/19.
GK612 KMJ 1435 – 1620 NRT 32A/320 Tu/We/Th *Oct/28 - Dec/18.
GK614 KMJ 2000 – 2145 NRT 32A/320 Daily

Kansai – Kumamoto NEW 2 daily with A320-200.
GK671 KIX 0810 – 0935 KMJ 32A/320 Daily
GK673 KIX 1520 – 1645 KMJ 32A/320 Daily
GK672 KMJ 1005 – 1110 KIX 32A/320 Daily
GK674 KMJ 1715 – 1820 KIX 32A/320 Daily

Kumamoto – Chubu Centrair NEW 2 daily with A320-200.
GK681 NGO 1045 – 1210 KMJ 32A/320 Mo/Fr/Sa/Su *Oct/26 – Dec/15, Jan/9 - Feb/16.
GK681 NGO 1045 – 1210 KMJ 32A/320 Daily *Dec/19 - Jan/5, Feb/20 - Mar/28.
GK683 NGO 1235 – 1400 KMJ 32A/320 Tu/We/Th *Jan/6 - Feb/19.
GK683 NGO 1240 – 1405 KMJ 32A/320 Tu/We/Th *Oct/28 - Dec/18.
GK685 NGO 1805 – 1930 KMJ 32A/320 Daily
GK680 KMJ 0850 – 1000 NGO 32A/320 Mo/Fr/Sa/Su *Oct/26 – Dec/15, Jan/9 - Feb/16.
GK680 KMJ 0850 – 1000 NGO 32A/320 Daily *Dec/19 - Jan/5, Feb/20 - Mar/28.
GK682 KMJ 1050 – 1200 NGO 32A/320 Tu/We/Th *Oct/28 - Dec/18, Jan/6 - Feb/19.
GK684 KMJ 1620 – 1730 NGO 32A/320 Daily

For the Winter 2014/2015 schedule, Jetstar Japan will operate up to 52 daily round-trips (104 flights) covering 11 domestic destinations, an increase of 16 round-trips compared to one year ago. The recently launched Kansai base (Jetstar Japan launches Kansai hub.) will boast six destinations, including Fukuoka (FUK/RJFF), Oita (OIT/RJFO), Okinawa/Naha (OKA/ROAH), Sapporo/New Chitose (CTS/RJCC), and Narita. The LCC, owned 33.3% by Qantas Airways (QF/QFA), 33.3% by Japan Airlines (JL/JAL), 16.7% by Mitsubishi, and 16.7% by Century Tokyo Leasing, currently operates 18 A320s with the 19th due in October.

And noteworthy is their increasing presence at Nagoya's main airport, which until now has only maintained once daily service each to Fukuoka, Kagoshima (KOJ/RJFK), and New Chitose. AirAsia Japan (Mk II) is expected to launch with a hub at Chubu Centrair (AirAsia Japan selects Nagoya Chubu Centrair.) by July 2015 with initial flights to Fukuoka and New Chitose, and Jetstar Japan will probably try to make good use of their first-mover advantage to have themselves established in the market before the rivalry begins.

Reference: Jetstar Japan, August 20th. (PDF; in Japanese)

Tuesday, August 19, 2014

Is AirAsia considering a Skymark takeover?

On August 19th, the Nikkei Shimbun reported that the AirAsia Group has started considering an investment in ailing Skymark Airlines (BC/SKY), including a possible takeover. It said that the Malaysian LCC, a very important customer for Airbus, is also talking with the European manufacturer to reduce the penalties they are seeking with Skymark for the canceled Airbus A380 order (Skymark's Airbus A380 order in jeopardy.), if AirAsia takes control of Japan's third largest carrier.
AirAsia's Airbus A320-214 9M-AHD taxies at Kuala Lumpur. (Photo: Ryosuke Yano)

Skymark holds 36 precious slot-pairs at preferred Tokyo/Haneda (HND/RJTT), something AirAsia is craving for. The report said that AirAsia has initiated discussions with several Japanese financial firms to make a bid for Skymark through AirAsia Japan (Mk II), which is expected to launch services from Nagoya/Chubu Centrair (NGO/RJGG) by July 2015 (AirAsia Japan selects Nagoya Chubu Centrair.). As far as voting-rights are concerned, foreign ownership of Japanese airlines is capped at 33%. Shares of Skymark rose almost 28% and closed at 230 JPY today. Major shareholders include Shinichi Nishikubo, its President and CEO, controlling 30.57%, travel agency H.I.S. with 7.72%, and Master Trust Bank of Japan owning 3.24%.

However, both airlines denied the report. "There is nothing the company is aware of and we have not been approached by AirAsia regarding any financial support," said a press release from Skymark, while AirAsia Group CEO Tony Fernandes said "Never seen such rubbish. AirAsia has no interest in Skymark in Japan. There have been no discussions with Skymark. We (are) focused on new airline," through Twitter. But then again, almost always there's no smoke without fire, and Nikkei is usually a reliable source. AirAsia Japan CEO Yoshinori Odagiri hasn't denied as well, saying "Nothing has materialized, but we keep all doors open." It may well be that AirAsia is only dismissing the reports to help lower Skymark's shares as much as possible.
Skymark's Boeing 737-86N JA737L taxies at Narita. The aircraft was returned to its lessor in April this year, and fitted with winglets it now serves with Jeju Air as HL8019. (Photo: Aviation Wire)

The first child of Japan's deregulation, Skymark is the only start-up that has so far succeeded in cracking the ANA/JAL duopoly, under the leadership of hands-on and charismatic Mr. Nishikubo. It is also what forced All Nippon Airways (NH/ANA) and Japan Airlines (JL/JAL) to launch subsidiary LCCs Peach Aviation (MM/APJ) and Jetstar Japan (GK/JJP), respectively. However, increased competition with LCCs as well as the legacies lowering prices, coupled with a depreciated JPY, high fuel bills, and costs regarding the introduction of the A330 (Skymark Airlines inaugurates Airbus A330 service.) and A380, it tumbled to a full-year loss for the first time in five years for FY2013, announcing a 1.8 billion JPY loss.

It was dealt a further blow when Airbus unilaterally terminated Skymark's A380 order, doubting the carrier's ability to pay. The European planemaker is said to be seeking 70 billion JPY in penalties, in addition to already-paid deposits amounting to 26.5 billion JPY, which is unlikely to be refunded. The figure is only expected to grow, as Rolls-Royce and interior makers also prepare to seek compensation from Skymark. As if that weren't enough, they posted a whopping 5.7 billion JPY loss only in the first quarter of FY2014 (Skymark posts 5.7 billion JPY loss for 1Q FY2014.), prompting accountants to report "doubts about its ability to continue as a going concern." As of June, Skymark's cash and near-term assets stood at 7.2 billion JPY.

Skymark is realigning their business by cutting unprofitable routes and concentrating on their core markets (Skymark announces Narita closure and Yonago cuts.), while also raising fares and introducing a revamped fare system from October where the price will vary depending on availability. Financial support, something they have never asked for in their history, is desperately being sought for. However, with Mr. Nishikubo continuing to emphasize "We'll try to survive on our own," and ANA and JAL obviously not wanting an AirAsia brand in their by far most profitable (and protected) market, backroom political lobbying has probably already begun and it will not be easy for AirAsia.

I certainly hope Skymark can make it on their own. It would be too bittersweet (and to Mr. Nishikubo the most) for an icon that virtually revolutionized Japan's air industry to be swallowed up, even if that is by another respected carrier that transformed the market in Southeast Asia.

Reference: Nikkei Shimbun, August 19th. (in Japanese)
Reference: Bloomberg Japan, August 19th. (in Japanese)
Reference: Skymark Airlines, August 19th. (in Japanese)
Reference: Tony Fernandes @ Twitter (in English)

Saturday, August 16, 2014

AirAsia Japan selects Nagoya Chubu Centrair.

AirAsia Japan (Mk II) has reportedly made its final decision to make Nagoya/Chubu Centrair (NGO/RJGG) its hub (New AirAsia Japan to be based at Nagoya Chubu Centrair.). On August 15th, CEO Yoshinori Odagiri revealed in an interview that they will set up a maintenance base at the airport serving Japan's third largest metropolitan area. "While there are no vacancies at Haneda and Narita not open 24 hours a day, Centrair is open around the clock," said Mr. Odagiri, adding "Kansai is attractive, but the situation is tough for a latecomer." Initial routes being considered are to Fukuoka (FUK/RJFF) and Sapporo/New Chitose (CTS/RJCC), with Taipei/Taoyuan (TPE/RCTP) expected to be their first international destination. 

On July 1st, AirAsia announced the reincarnation of their Japanese unit (AirAsia Japan is officially reborn; first flight June 2015.), this time with non-airline partners which includes Octave Japan Infrastructure Fund (19%), Rakuten (18%), Noevir Holdings (9%), and Alpen (5%) with an initial capital totaling 7 billion JPY together with AirAsia (49%). Voting-rights-based, AirAsia will control 33%, the maximum possible figure allowed under Japan's current airline foreign ownership laws, while Octave will have 28.2%, Rakuten 18%, Noevir 13.4%, and Alpen 7.4%.
Airbus A320-214 JA01AJ of AirAsia Japan (Mk I) sits at Narita in its final days in Japan. The aircraft is now with the group's Indonesian unit as PK-AZJ. (Photo: Ryosuke Yano)

Work is underway for a June 2015 launch, or "July 20th (2015) at latest," according to Mr. Odagiri, with a fleet of two 180-seat Airbus A320s supplied from AirAsia Group's huge order pool. It will likely start off with two routes from Chubu Centrair, most likely Fukuoka and New Chitose with three round-trips each, later expanding to other domestic and regional international destinations, with Taiwan expected to be the first of the latter. A 'Fly-Thru' product will also be offered including on AirAsia X (D7/XAX), which already serves Chubu Centrair four times weekly from Kuala Lumpur (KUL/WMKK). Two more A320s will be added before the end of 2015, with five to be added each year from 2016 onwards. A320neo aircraft will be added from 2016, putting Vietnam within range. Its first full-year profit is targeted by FY2017, its third year of operations.

The Chubu Centrair – New Chitose route is currently served by All Nippon Airways' (NH/ANA) Group seven times daily using Boeing 767s and 737s, Japan Airlines (JL/JAL) five times daily with 737s, Skymark Airlines (BC/SKY) twice daily with 737s, and Jetstar Japan (GK/JJP) once daily with A320s. The Fukuoka route is served by ANA six times daily with A320s, 737s, and Bombardier CRJs, Star Flyer (7G/SFJ) four times daily with A320s, de facto operating for ANA (Star Flyer to add ANA's code on all flights.), and Jetstar Japan once daily with A320s. Fuji Dream Airlines (JH/FDA) flies five round-trips connecting Nagoya/Komaki (NKM/RJNA) and Fukuoka, with JAL code-sharing on all flights.

However, Mr. Odagiri is bullish about getting slots at Tokyo/Haneda (HND/RJTT), saying Tokyo/Narita (NRT/RJAA) is too far and curfew-plagued, while Ibaraki (IBR/RJAH) is cost effective but again too far and also too small for a hub. "For 2020 (Tokyo Olympics/Paralympics), the MLIT (Japan Ministry of Land, Infrastructure, Transport, and Tourism) is considering all options, and we would like to make the necessary preparations," citing the government seriously talking about opening up airspace over metropolitan Tokyo, which could potentially create 50 or so more slot-pairs. Haneda operates four runways that are fully utilized, however, current airspace restrictions force all aircraft to arrive from and depart towards Tokyo Bay, meaning the number of movements per runway is kept low. A new runway would not make it before 2020.
AirAsia Japan (Mk I) and (Mk II) CEO Yoshinori Odagiri. (Photo: Aviation Wire)

If they fail to get slots at Haneda, Mr. Odagiri says they would have to consider Narita and Ibaraki, but at the same time ask to open up military airports in the Kanto (Greater Tokyo) region such as Japan Self Defense Force (JSDF)-controlled Atsugi (NTA/RJTA) and U.S. Air Force (USAF)-controlled Yokota (OKO/RJTY). Asked if AirAsia Japan (Mk II) is interested in partnering with troubled Skymark (Skymark posts 5.7 billion JPY loss for 1Q FY2014.), which currently holds 36 prized slot-pairs at Haneda, "Nothing has materialized, but we keep all doors open," he answered.

The Malaysia-based LCC group's first crack at the Japanese market with AirAsia Japan (JW/WAJ) (Mk I) (CoachFlyer JW8541: NRT - FUK on AirAsia Japan's Airbus A320.) ended in a divorce with joint-venture (JV) partner ANA, only 10 months after launching operations in August 2012, due to disagreements over how the airline would be run. "We would first listen to Tony (Fernandes), then bring it to ANA. But couldn't get expected responses in expected time frames," says Mr. Odagiri, who also headed the first incarnation. It ceased operations on October 26th, 2013, and relaunched as Vanilla Air (JW/VNL) under 100% ANA ownership on December 20th (Vanilla Air launches operations.). 

Another factor behind the failure was AirAsia's website being deemed difficult to use by the Japanese public; it asked to fill out passport information even on domestic flights, required to fill out the 'Issuing Bank' of a credit card which is not the norm in Japan, and simply took too much time. "What the Japanese feel as easy-to-use is something like," Mr. Odagiri said, adding "A Japanese manager has been assigned to take over AirAsia's website development. A revamped easy-to-use website for the entire group should be up by Spring 2015, and small bugs should be fixed by the time we start ops."

AirAsia Japan (Mk II) has already started crew recruiting. "Some employees remained with Vanilla Air for the sake of jobs, but they didn't enter the airline just to work for a company that would change its brand in just 10 months," said Mr. Odagiri, implying some if not many of the current employees at Vanilla could move to the red brand. It is rumored that AirAsia is offering crew salaries similar to ANA's figures, which could lure JAL crews, whose salaries were drastically cut during that group's restructuring. Pilot shortages have plagued LCCs Peach Aviation (MM/APJ) (Peach outlines Summer 2014 mass cancellations.) and Vanilla (Vanilla Air cancels 154 flights in June due to pilot shortage.) with mass cancellations.

Together with their recently-launched India unit, AirAsia Group's second attempt at the Japanese market is also part of their strategy to shift dependence from Southeast Asia, a still-growing but becoming an over-crowded market, to other parts of Asia and beyond, and to become a global brand. Although nothing has been decided yet, AirAsia is considering an affiliate in eastern Europe, as well as an AirAsia X India that would put Africa and Europe within range, and an AirAsia X Japan that would enable them to reach Canada, Hawaii, and west coast U.S.A. The group's recent order for 50 A330-900neo aircraft would obviously be too much for just the current AirAsia X brands in Indonesia, Malaysia, and Thailand to absorb.

Reference: Traicy, July 29th. (in Japanese)
Reference: Jiji Press, August 15th. (in Japanese)
Reference: Japan Times, August 16th. (in English)

Friday, August 15, 2014

Skymark announces Narita closure and Yonago cuts.

On August 14th, Skymark Airlines (BC/SKY) announced the first step of realigning their business. The proposed Winter 2014/2015 schedule effective October 26th through December 25th will see the number of direct links cut by six, including a complete withdrawal from Tokyo/Narita (NRT/RJAA) and cuts at Yonago (YGJ/RJOH) (Skymark mulls pull-out from Narita and Yonago.), reducing the total number of routes to 23.
Boeing 737-8HX JA737N at Tokyo's Haneda. It will be returned to lessor ACG in May 2015. All three remaining non-winglet 737s will be withdrawn from service by October 2015, reducing the 737 fleet to 27. (Photo: Ryosuke Yano)

Affected routes from Narita are Okinawa/Naha (OKA/ROAH), Sapporo/New Chitose (CTS/RJCC), and Yonago, while New Chitose and Tokyo/Haneda (HND/RJTT) will be cut from their Yonago focus city. Ibaraki (IBR/RJAH) – Nagoya/Chubu Centrair (NGO/RJGG), which has been seeing the lowest load factor in their network, is also being axed. The two slot-pairs at Haneda will be allocated to Fukuoka (FUK/RJFF) and Kobe (UKB/RJBE), with each receiving one.

Frequency Increases:
Fukuoka – Naha from 3 to 4 daily.
Haneda – Fukuoka from 10 to 11 daily. Airbus A330 operating on 10 round-trips.
Haneda – Kobe from 6 to 7 daily.

Ibaraki – Chubu Centrair 1 daily.
Narita – Naha 2 daily.
Narita – New Chitose 2 daily. 
Narita – Yonago 2 daily.
Yonago – New Chitose 1 daily.
Yonago – Haneda 2 daily.

Load factors from Narita weren't bad, hovering around 65-70%, however, low-season rates dropped to 50-60% last year, and with the Naha and New Chitose routes directly competing with LCCs Jetstar Japan (GK/JJP) and Vanilla Air (JW/VNL), Skymark has had to keep prices down to remain in the race. The Yonago link, though without a competitor, has never been popular. Their shelving of long-haul Airbus A380 plans from Narita (Skymark's Airbus A380 order in jeopardy.) also made domestic operations there, originally aimed at feeding the A380s, redundant. Skymark first landed at Narita on October 30th, 2011.

Yonago, the newest focus city for Japan's third largest airline which was only launched last December, has been observing low load factors around 30-40% for all routes except for Haneda (Skymark commences Sendai – Okinawa.). New Chitose and Haneda have been axed, however, a one-stop through-fare will be offered via their second biggest hub at Kobe. The Yonago Haneda route sees heavy competition from All Nippon Airways (NH/ANA), which flies five round-trips and slashed fares predatorily to match Skymark after their entry. 

The Ibaraki – Chubu Centrair route, which was only started on April 18th (Skymark adds Fukuoka and Nagoya from Ibaraki.), has seen load factors treading around 10-20% ever since launch. Ibaraki, Japan's first and so far only LCC-dedicated airport, will still have non-stop flights to Fukuoka, Kobe, and New Chitose.

Airbus is said to be seeking around 70 billion JPY in penalties for the A380 cancellation, in addition to already-paid deposits amounting to 26.5 billion JPY, which is unlikely to be refunded. The figure is only expected to grow, as Rolls-Royce and interior makers also prepare to seek compensation from Skymark. On the other hand, the airline posted a full-year loss for the first time in five years for FY2013, announcing a 1.8 billion JPY loss. It lost another 5.7 billion JPY only in the first quarter of FY2014, prompting its accountants to report "doubts about its ability to continue as a going concern." Their cash and near-term assets stood at 7.2 billion JPY as of June, and they are desperate for financial support, something they have never asked for in their history.

Skymark's latest strategy tweak also includes a revamp of their fare system, offering prices that vary depending on availability, from October 26th onwards. Fares have also been raised. Its resource deployment will concentrate on its lucrative Haneda slots; increase frequency on trunk routes and bring up utilization of its A330s. However, this doesn't promise good returns; remember Star Flyer? Dumping Haneda slots into trunk routes led to increased passenger volume, but lower load factors and lower yields (Star Flyer to add Yamaguchi-Ube; but reduce Fukuoka.). I certainly hope they survive; ANA and JAL have no mercy in slashing fares when Skymark enters, but also notorious for bringing fares back up high in markets Skymark has exited.

Reference: Aviation Wire, August 14th. (in Japanese)

*Post edited/updated on August 19th.

Thursday, August 14, 2014

JAL to resume Kansai – Los Angeles in Winter 2014/2015.

Japan Airlines (JL/JAL) will reportedly launch Osaka/Kansai (KIX/RJBB) – Los Angeles (LAX/KLAX) service from sometime during the Winter 2014/2015 timetable, which begins on October 26th, using Boeing 787-8 Dreamliners. Nothing official has been released from the airline as of yet.
Boeing 787-8 JA823J at Tokyo's Haneda Airport with illuminated Tokyo Gate Bridge in the background. (Photo: Ryosuke Yano)

Japan's second largest carrier suspended the route in September 2006, however, the local business community along with Kansai Airport had been pushing for the resumption. Japanese corporations are loyal customers of ANA and JAL. Currently, United Airlines (UA/UAL) and China Airlines (CI/CAL) offer the only non-stop flights to mainland U.S.A, flying to San Francisco (SFO/KSFO) and New York/John F. Kennedy (JFK/KJFK), respectively, though the latter will be suspended this October.

JAL had been considering resuming both Los Angeles and London (JAL to resume Kansai to London and Los Angeles in 2015.) from Japan's second largest metropolis, however, relaunch of the latter has been put on hold for now. "Once we start, it becomes difficult to quit even if it's unprofitable," said a JAL staff who spoke on anonymity. The London link was also suspended in March 2009. JAL's modest international network from Kansai presently includes Bangkok/Suvarnabhumi (BKK/VTBS), Honolulu (HNL/PHNL), Seoul/Gimpo (GMP/RKSS), Shanghai/Pudong (PVG/ZSPD), and Taipei/Taoyuan (TPE/RCTP).

Reference: Nikkei Shimbun, August 14th. (in Japanese)

Monday, August 11, 2014

Skymark commences Sendai – Okinawa.

On August 9th, Skymark Airlines (BC/SKY) launched seasonal service between Sendai (SDJ/RJSS) and Okinawa/Naha (OKA/ROAH). The route will be operated once daily with 177-seat Boeing 737-800s through September 15th.
Boeing 737-82Y(WL) JA73NE taxies past its fellow 737s as it arrives at Haneda. (Photo: Ryosuke Yano)

Flight Schedule (Aug/1 - Sep/15):
Sendai – Naha NEW 1 daily with 737-800.
BC583 SDJ 0910 – 1205 OKA 73H/738 Daily
BC586 OKA 1820 – 2100 SDJ 73H/738 Daily

In other news, Japan's third largest carrier released their July load factors. The figure was 74.4% system-wide, up 2.8% compared to the same period last year; number of available seats rose 6.7% to 920,949, while passengers carried increased 9.7% to 666,834. Their 36 slot-pairs at Tokyo/Haneda (HND/RJTT) continue to post high figures with all above 70%; the six routes from the preferred airport serving the capital generate roughly 80% of their revenue. Sendai is getting there, with numbers exceeding 60%, along with routes from Naha to Ishigaki (ISG/ROIG) and Miyako (MMY/ROMY), both of which posted over 70%.

Meanwhile, load factors from their new focus city at Yonago (YGJ/RJOH) continue to tread around 30-40%, excluding the double-daily Haneda link, while Tokyo/Narita (NRT/RJAA) sees load factors exceeding 70%, however, with heavy competition with LCCs yield is believed to be low (Skymark mulls pull-out from Narita and Yonago.). In the current fare war, the breakeven point for their Narita operations is estimated around 80-85%.

Sapporo/New Chitose (CTS/RJCC) was the highest, recording 90.9%, up 5.2% from the same period last year. The Fukuoka (FUK/RJFF) route saw the figure decrease by 7.2% to 73.1% as a result of capacity increase following the introduction of the Airbus A330 (Skymark Airlines inaugurates Airbus A330 service.). Kagoshima (KOJ/RJFK) was at 74.6%, Kobe (UKB/RJBE) saw 73.4%, Naha 86.1%, and Yonago 73.7%.

Skymark competes with LCCs Jetstar Japan (GK/JJP) and Vanilla Air (JW/VNL) on two routes; New Chitose saw 77.2%, up 8.7% over last year, and Naha was at 76.4%, down 1.6%. The Yonago link sees no competitor, but the figure was 30.9%.

All routes except for Haneda are struggling. Naha saw 43.5% while New Chitose was at 42.6% (Skymark expands Yonago, axes Asahikawa and Kumamoto.). Kobe remained low at 37.3%, while the Narita link was even lower, as mentioned above. On August 8th, Governor of Shimane Prefecture Shinji Hirai reported that Shinichi Nishikubo, Skymark's President and CEO, promised that "a complete withdrawal will not happen," though it could also mean all routes except for Haneda are at danger of being axed.

Kanto's (Greater Tokyo) third airport at Ibaraki (IBR/RJAF) saw its Fukuoka route at 48.2%, and Nagoya/Chubu Centrair (NGO/RJGG) worst in the system at 24.3% (Skymark adds Fukuoka and Nagoya from Ibaraki.). New Chitose was 72.4%, up 6.4%.

Kobe saw 55.7% (Skymark announces Yonago and Sendai expansion.), while Fukuoka saw 64.6% (up 2.1%) and New Chitose saw 64.1% (up 2.2%).

Naha – Ishigaki posted 73.3%, an increase of 17.0% over the same period last year, while Naha – Miyako saw 70.9%, also an increase of 15.2%.

Reference: Aviation Wire, August 11th. (in Japanese)

Friday, August 8, 2014

ANA's Boeing 787-9 enters service.

All Nippon Airways (NH/ANA) became the first airline in the world to place the Boeing 787-9 into scheduled revenue service on August 7th, when JA830A, their first of the stretched Dreamliner, inaugurated operations on the Tokyo/Haneda (HND/RJTT) – Fukuoka (FUK/RJFF) route (ANA to fly Boeing 787-9 inaugural on August 7th.). The aircraft also flew to Osaka/Itami (ITM/RJOO) and Matsuyama (MYJ/RJOM) later in the day.
Boeing 787-9 JA830A at Spot 60 at Haneda Airport with staff carrying a banner reading 'Fly with ANA on the 787-9 Dreamliner'. (Photo: Aviation Wire)

The inaugural flight, NH241, departed Spot 60 of Haneda's Terminal 2 at 0730 JST with 387 passengers (including 11 infants) and 11 crew. It was piloted by Captains Katsuki Ikeda and Yuichi Yamamoto, with Ikeda-san in command, while the Chief Purser was Kazuyo Nishizono. President and CEO Osamu Shinobe was also present at the ceremony that took place at the gate. ANA took delivery of JA830A on August 27th and it arrived at Haneda on July 29th (ANA takes delivery of first Boeing 787-9.). It operated a special sightseeing flight carrying Japanese and American primary (elementary) school students on August 4th (ANA flies world's first Boeing 787-9 passenger flight.).

Compared to the 787-8, the Dash 9 incorporates an additional 3.05-meter section in both the forward and aft of the fuselage, stretching the airframe by 6.1 meters. It can fly approximately 555 kilometers farther than the original version. Compared to the 767-300ER, the second member of the Dreamliner family can carry 1.2 times more passengers and cargo, and fuel economy will also be 23% better, according to ANA. The airline has said the 787-8 is 20% better than the 767-300ER.

Powered by two Rolls-Royce Trent 1000 engines, ANA's domestic 787-9s are being configured in a 395-seat layout with 18 Premium Class (six abreast; 2-2-2) and 377 economy class (nine abreast; 3-3-3) seats, carrying 60 more passengers (six Premium Class and 54 economy) than their domestic 787-8s. Another domestic 787-9, registered JA833A, will be delivered this autumn, while the first long-haul international 787-9 configured with 215 seats (48 business, 21 premium economy, and 146 economy) will be delivered in early 2015. ANA is the biggest 787 customer to date, with orders counting 36 787-8s (28 delivered), and 44 787-9s (1 delivered).

Reference: Aviation Wire, August 7th. (in Japanese)

Thursday, August 7, 2014

Vanilla Air announces Hong Kong and Kaohsiung.

On August 7th, Vanilla Air (JW/VNL) announced that they will launch Hong Kong (HKG/VHHH) in November and Kaohsiung (KHH/RCKH) in February 2015, from their hub at Tokyo/Narita (NRT/RJAA). President Tomonori Ishii reported in a press conference held in Tokyo.
Airbus A320-216(SL) JA01VA taxies for departure from Sapporo's New Chitose on a sunny winter day. (Photo: Vanilla Air)

The Hong Kong route will initially operate with three weekly round-trips, increasing to two daily by March 2015, the end of FY2014. One of the flights will fly on a red-eye schedule. Kaohsiung, which becomes Vanilla's second destination in Taiwan, will see a daily round-trip from the beginning. Details of the timetable along with fares will be released in September.

Network Overview (Oct/26/2014 - Mar/28/2015):
Narita – Amami 1 daily. (no change)
Narita – Hong Kong NEW 3 weekly, to be increased to 2 daily by Mar/2015.
Narita – Kaohsiung NEW 1 daily.
Narita – Okinawa/Naha up to 2 daily. (no change)
Narita – Sapporo/New Chitose from 5 to up to 4 daily. (reduction)
Narita – Seoul/Incheon from 2 to 1 daily. (reduction) 
Narita – Taipei/Taoyuan from 1 to 3 daily. (increase)

The wholly-owned subsidiary LCC of ANA Holdings, parent of All Nippon Airways (NH/ANA), currently operates three brand-new 180-seat Airbus A320s and three secondhand 166-seat A320s provided by sister ANA. The latter three will be replaced by three factory-fresh examples between September and November, while another two will be delivered in early 2015, bringing the fleet to eight.

In recent interviews, Mr. Ishii had revealed that other cities under consideration include Guam, Macau, Saipan, and Taichung. Vanilla's June load factor saw 58.7% for domestic and 72.7% for international flights. For the latter, Taiwan is doing particularly well seeing around 80%, while Korea is declining, due to continued political tensions between the two countries, and not made better by the ferry disaster in April, which prompted many Koreans to cancel trips and refrain from travelling for leisure for the remainder of the year. As for the former, they still haven't been able to make Narita work as a domestic airport.

Reference: Aviation Wire, August 1st. (in Japanese)
Reference: Aviation Wire, August 7th. (in Japanese)

Wednesday, August 6, 2014

Skymark mulls pull-out from Narita and Yonago.

Skymark Airlines (BC/SKY) is considering completely pulling out of Tokyo/Narita (NRT/RJAA) on October 25th, the end of the Summer 2014 timetable, and possibly downgrade Yonago (YGJ/RJOH) to a spoke city, in an effort to cut unprofitable routes and restructure their network after heavy losses (Skymark posts 5.7 billion JPY loss for 1Q FY2014.) and a likely hefty penalty from Airbus for the A380 cancellation (Skymark's Airbus A380 order in jeopardy.).
Boeing 737-8HX(WL) JA73NB taxies at Okinawa's Naha Airport. (Photo: Ryosuke Yano)

From Narita, Japan's third largest carrier currently operates two daily round-trips each to Okinawa/Naha (OKA/ROAH), Sapporo/New Chitose (CTS/RJCC), and Yonago, but these were intended to feed their long-haul international routes that were to be operated by the Airbus A380. Now that the order has been canceled and international plans shelved, there is no need for them to keep a domestic network at Narita, which used to include Asahikawa (AKJ/RJEC), Ishigaki (ISG/ROIG), and Kobe (UKB/RJBE) as well.

Although Naha and New Chitose show latest load factors (June) of 64.5% and 67.9%, respectively, above the system-wide average of 65.6%, low-season rates dropped to 50-60% in FY2013. With both routes directly competing with LCCs Jetstar Japan (GK/JJP) and Vanilla Air (JW/VNL), Skymark has had to keep prices down to remain in the race, and thus hasn't been able to produce enough yield. The Yonago link continues to bleed with a June load factor of 28.1%.

Meanwhile, its Yonago focus city, which was only added to the network on December 20th last year and expanded from April (Skymark expands Yonago, axes Asahikawa and Kumamoto.), has not seen improved results. The latest load factor (June) for the daily New Chitose round-trip was 43.6%, while the also once-daily Naha link was at 45.6%, and their Kobe flight at 45.0%. Their twice-daily Tokyo/Haneda (HND/RJTT) service was doing best at 59.0%, but still below the system-wide average, while the Narita link was at a miserable 28.1%, as aforementioned. Yonago could see all but its Haneda flights axed, if not a complete closure.

Although international ambitions for Narita have been shelved, Skymark will now ask the government for midnight slots at Haneda to use its A330s (Skymark Airlines inaugurates Airbus A330 service.) for routes to Hawaii, Singapore, and Thailand. The A330s currently serve only domestic routes, and therefore sit on the ground at night, so this would enable them to increase utilization and go international without additional aircraft acquisition costs. Their A330s are fully equipped with long-haul-compatible galleys. However, this plan does have its share of regulatory hurdles it has to overcome.

Meanwhile, rumors of an AirAsia Japan (Mk II) (AirAsia Japan is officially reborn; first flight June 2015.) tie-up (and investment in Skymark) are circulating, though their CEO Yoshinori Odagiri has commented "Nothing has materialized, but we keep all doors open." AirAsia Japan is craving for Haneda rights and Skymark has 36 precious slot-pairs there, however, these generate roughly 80% of their revenue and it is unlikely they would let them go. Skymark hopes they can continue to go it alone, but with cash reserves dwindling and Airbus seeking up to 70 billion JPY for the A380 cancellation, the airline has admitted their business is at risk without outside financial support.

Reference: Aviation Wire, July 11th. (in Japanese) 
Reference: Aviation Wire, August 6th. (in Japanese)