New AirAsia Japan delays service entry to July 2016.

On February 10th, AirAsia Japan (Mk II) [DJ] officially admitted that it would be unable to meet its target operations launch in April 2016 (New AirAsia Japan receives AOC; takeoff in April 2016.). The company explained it was due to "a number of factors." This becomes the second delay (AirAsia admits Skymark bid defeat, Japan unit delay to 2016.), and they will now work to start flying in July, which would put it more than one year behind their original time schedule (New AirAsia Japan takeoff slipping to Summer 2016?).

Airbus A320-216(SL) JA02DJ/F-WWBO (msn 6972), AirAsia Japan's second aircraft, will be delivered in late February, though its first A320 has yet to fly since delivery last October. A special livery designed by Mika Ninagawa was planned for the second example, but seems to have been postponed to a later airframe. Flight training was originally slated to begin in November last year, but is now planned by March. (Photo: Tobias Gudat)

Japan's fifth LCC had already been set back with a 10-month delay (AirAsia Japan is officially reborn; first flight June 2015.), largely due to shifting strategy to focus more on the international market rather than domestic, difficulties in recruiting pilots and setting up a maintenance scheme, and much-longer-than-anticipated preparation to apply for an Air Operator's Certificate (AOC). It finally obtained one on October 6th, 2015 and announced that it would launch in April with flights from Nagoya/Chubu Centrair [NGO/RJGG] to Sapporo/New Chitose [CTS/RJCC], Sendai [SDJ/RJSS], and Taipei/Taoyuan [TPE/RCTP] (New AirAsia Japan receives AOC; takeoff in April 2016.). However, until now their first Airbus A320 has not flown once since delivery four months ago (New AirAsia Japan receives first Airbus A320.).

Dissatisfied with slow progress, effective December 1st, the LCC group replaced CEO Yoshinori Odagiri, formerly a veteran from All Nippon Airways [NH/ANA] who also headed the first AirAsia Japan (Mk I) [JW/WAJ], with ex-Skymark Airlines' [BC/SKY] Chairman Takashi Ide and President Masakazu Arimori in a surprise move (Skymark relaunched with ANA sponsorship.). Mr. Ide was made AirAsia Japan's Chairman while Mr. Arimori took the place of CFO, while ex-Dell Osamu Hata was promoted to CEO (AirAsia Japan CEO to quit, ex-Skymark executives coming.). However, it must be noted that Skymark and AirAsia Japan are different; the former has been a domestic player centered around its precious slots at Tokyo/Haneda [HND/RJTT], while the latter is based at Chubu Centrair with at least 55% of its capacity to be international.

Nonetheless, the Skymark duo have wide and deep knowledge of the domestic market and expertise in running a low-cost operation in Japan's unique economic and regulatory environment. And, the hidden agenda may be that, they along with management at AirAsia have not given up on eventually merging AirAsia Japan and Skymark, which has so far been politically impossible (Is AirAsia considering a Skymark takeover?) (ANA and AirAsia bid to save Skymark.). Skymark's new President Nobuo Sayama still maintains close relations with the duo, and Skymark's new owners Integral Corporation and ANA Holdings have agreed to re-list the airline by 2020. Meanwhile, the government has hinted liberalizing Haneda to a significant extent sometime, but not long, after the 2020 Tokyo Olympics/Paralympics, and AirAsia and Skymark may be quietly waiting for the appropriate time.

With the latest postponement, some media have voiced concerns over whether AirAsia Japan could really take off. However, though it may be delayed, the Japanese unit of Asia's largest LCC has so much potential it could realize and Tony Fernandes is probably serious about it. Aside from Spring Airlines Japan [IJ/SJO], AirAsia Japan is best placed among Japanese LCCs to tap into China, the single largest (and still growing) source of inbound visitors to Japan, as it already has brand-awareness with AirAsia Group carriers serving 17 Chinese cities. Furthermore, sister carrier AirAsia X [D7/XAX] (and probably Thai AirAsia X [XJ/TAX] as well when Thailand's ICAO red flag is lifted and FAA rating is returned to Category 1) is venturing into the trans-Pacific market (starting with Honolulu [HNL/PHNL]) with a stop in Japan using fifth freedom rights, and if this proves successful, it could grow not only to provide a Japan – North America operation (which is a shrinking market), but a competitive one-stop China – North America (growing market) option.

Source: Nikkei Shimbun, 2016 February 10th (in Japanese) 
Source: Travel Vision, 2016 February 10th. (in Japanese)

New AirAsia Japan takeoff slipping to Summer 2016?

Effective December 1st, AirAsia Japan [DJ] revamped its board by essentially relegating CEO Yoshinori Odagiri to Adviser, a largely ceremonial position, and instead promoting CFO Osamu Hata to CEO and hiring bankrupt Skymark Airlines' [BC/SKY] former Chairman Takashi Ide as Chairman and former President Masakazu Arimori as CFO (AirAsia Japan CEO to quit, ex-Skymark executives coming.). But what made AirAsia Group swap management during such important times when it is preparing to launch operations?

Airbus A320-216(SL) JA01DJ/F-WWBV seen before delivery. It was handed over to AirAsia Japan on October 9th, and arrived at Japan on October 16th. Their second aircraft, to be adorned with a special livery designed by Mika Ninagawa, will be delivered in February. (Photo: Tobias Gudat)

Reportedly, there was unmendable distrust between James Rhee, North Asia CEO for the AirAsia Group, and Mr. Odagiri. Japan's fifth LCC had been set back with a nine-month delay (AirAsia Japan is officially reborn; first flight June 2015.), largely due to shifting strategy to focus more on the international market rather than domestic, difficulties in recruiting pilots and setting up a maintenance scheme, and much-longer-than-anticipated preparation to apply for an Air Operator's Certificate (AOC), which it received on October 6th (New AirAsia Japan receives AOC; takeoff in April 2016.). But without Mr. Odagiri's strenuous yet patience-necessary talks with regulator Japan Civil Aviation Bureau (JCAB), AirAsia Japan could not have obtained it. However, Mr. Rhee could not wait any longer.

On the other hand, Mr. Hata, who previously worked as CEO for Dell Japan, does not have any experience in the airline industry, let alone a unique market like Japan. So talks to headhunt the former Skymark duo reportedly started as early as late September, when they withdrew from Japan's embattled third largest airline after sponsors Integral Corporation and ANA Holdings installed a new board (Skymark relaunched with ANA sponsorship.). Mr. Ide and Mr. Arimori had maintained both official and personal relationships with Mr. Fernandes; the first AirAsia Japan (Mk I) was originally planned to be a joint-venture (JV) with Skymark until ANA stepped in, while AirAsia Group bid to sponsor Skymark (ANA and AirAsia bid to save Skymark.), and at one time Mr. Ide envisioned merging Skymark with the new AirAsia Japan in the long-term. But all of this was politically difficult as Skymark held 36 precious slot-pairs at heavily-regulated Tokyo/Haneda [HND/RJTT] (AirAsia admits Skymark bid defeat, Japan unit delay to 2016.).

Meanwhile, its first aircraft, Airbus A320-216(SL) JA01DJ, which had arrived on October 18th (New AirAsia Japan receives first Airbus A320.), remained dormant at Nagoya/Chubu Centrair [NGO/RJGG], as the airline still did not have a working maintenance team. The aircraft's battery died and its auxiliary power unit (APU) went out of order, and it was not able to have an engine run-up until early December. Training flights were expected by November, but that too has been pushed back to at least January. It is widely believed that its current April 2016 in-service target could be missed by several months. Sources close to the matter also point out that it has already used almost half of its initial 7 billion JPY capital, and cash injections are likely necessary as it takes delivery of its second A320 in February and more employees come on-line.

Can the ex-Skymark duo guide AirAsia Japan? They have wide and deep knowledge of the domestic market and expertise in running a low-cost operation in Japan's unique economic and regulatory environment, however, that said Skymark's success centered around its prized slots at Haneda while AirAsia Japan is based at Chubu Centrair, and Skymark has been a purely domestic carrier while AirAsia Japan plans to allocate at least 55% of its capacity to international. And there is reportedly already looming distrust between employees and the new management, and rumors point out Mr. Hata may be leaving the airline as well.

AirAsia Japan is a stepping stone for the AirAsia Group to expand its network to North America, and also has the potential to bring true (non-ANA/JAL) competition back to Japan. Hopes are still high AirAsia Japan would keep Mr. Fernandes' words, "This is Part 2 of AirAsia Japan's performance, and it will be the last. There won't be a third."

Source: Diamond Online, 2015 December 7th. (in Japanese)
Source: Aviation Wire, 2015 December 16th. (in Japanese)
Source: Aviation Wire, 2015 December 17th. (in Japanese)

AirAsia Japan CEO to quit, ex-Skymark executives coming.

New AirAsia Japan [DJ] has announced that effective December 1st, CEO Yoshinori Odagiri will resign and Chief Financial Officer (CFO) Osamu Hata, formerly with Dell Japan, will be promoted to succeed the role. AirAsia Group has also confirmed that on the same date, ex-Skymark Airlines' [BC/SKY] executives will join the board, including former Chairman Takashi Ide and President Masakazu Arimori, both of whom stepped down from Japan's bankrupt third largest airline (Skymark to file for bankruptcy.) after a new management was installed by ANA Holdings, parent of All Nippon Airways [NH/ANA], and Integral Corporation (Skymark relaunched with ANA sponsorship.).

New AirAsia Japan's CEO Yoshinori Odagiri (center) poses in front of their maiden aircraft Airbus A320-216(SL) JA01DJ at Chubu Centrair after delivery on October 16th. Osamu Hata will be promoted to CEO while ex-Skymark Airlines Takashi Ide will play the representative role of Chairman. (Photo: Aviation Wire)

AirAsia Group started courting the duo not long after Skymark's board was revamped effective September 29th. They had maintained both official and personal relationships with AirAsia Group CEO Tony Fernandes, and at one time Mr. Ide even envisioned handing Skymark control to Asia's largest LCC group in the long term (ANA and AirAsia bid to save Skymark.). Mr. Ide will become Chairman and Mr. Arimori will become CFO, taking the place of Mr. Hata. The duo has wide and deep knowledge of the domestic market and expertise in running a low-cost operation in Japan's unique economic and regulatory environment. That said, Skymark's success centered around its 36 slot-pairs at regulated Tokyo/Haneda [HND/RJTT] while AirAsia Japan is based at Nagoya/Chubu Centrair [NGO/RJGG], and Skymark has been a purely domestic carrier while AirAsia Japan plans to allocate at least 55% of its capacity to international.

Mr. Odagiri, who also served as CEO with the first AirAsia Japan [JW/WAJ] (CoachFlyer JW8541: NRT - FUK on AirAsia Japan's Airbus A320.), will become Adviser. Although no reason has officially been given, the former ANA veteran is likely stepping down due to conflict of ideas within the board on how the new Japanese unit would be run. Having been founded in July 2014, Japan's fifth LCC has been set back with almost a year's delay in launching operations (AirAsia Japan is officially reborn; first flight June 2015.), largely due to shifting strategy to focus more on the international market rather than domestic, difficulties in recruiting pilots and setting up a maintenance scheme, and much-longer-than-anticipated preparation to apply for an Air Operator's Certificate (AOC), which it obtained on October 6th (New AirAsia Japan receives AOC; takeoff in April 2016.).

In terms of voting rights, the new AirAsia Japan is owned by AirAsia Investment 33%, Rakuten 18%, Noevir Holdings 18%, Alpen 18%, and FinTech Global Trading 13%. Having received an AOC, it took delivery of its first Airbus A320 on October 9th (New AirAsia Japan receives first Airbus A320.) and revealed that operations would start in April 2016 from their Chubu Centrair hub to Sapporo/New Chitose [CTS/RJCC], Sendai [SDJ/RJSS] (New AirAsia Japan mulls Nagoya – Sendai.), and Taipei/Taoyuan [TPE/RCTP]. The original AirAsia Japan ceased operating in October 2013 after the Malaysian parent terminated the joint-venture (JV) with partner ANA due to managerial differences. It has since been relaunched as Vanilla Air [JW/VNL] under full ANA control (Vanilla Air launches operations.).

Source: Aviation Wire, 2015 November 27th. (in Japanese)
Source: Nikkei Shimbun, 2015 November 28th. (in Japanese)
Source: Asahi Shimbun, 2015 November 29th. (in Japanese)
Source: Aviation Wire, 2015 November 30th. (in Japanese)

*Edited/updated on November 30th.  

AirAsia and Rakuten to announce AirAsia Japan on July 1st.

Japan's largest e-commerce firm Rakuten will reportedly be AirAsia Group's primary Japanese partner to launch the new AirAsia Japan (Mk II). The new LCC plans to launch domestic and regional international routes from Nagoya/Chubu Centrair (NGO/RJGG) in summer 2015 using Airbus A320s. AirAsia Group CEO Tony Fernandes and Rakuten President Hiroshi Mikitani are expected to hold a joint press conference on July 1st.

AirAsia Group CEO Tony Fernandes speaking at the New Economy Summit 2014 held in Tokyo in April. (Photo: AFP)

The Malaysian LCC's first attempt 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 All Nippon Airways (NH/ANA) only 10 months after launching operations in August 2012, due to disagreements over how the airline would be run and other complicated reasons. Operations ceased on October 26th, 2013, and the airline restarted as Vanilla Air (JW/VNL) on December 20th under 100% ANA ownership (Vanilla Air launches operations.). 

Asked about the deal, a Rakuten spokesperson commented "There is nothing to disclose at this moment." Rakuten operates Rakuten Travel, a popular internet-based travel website, and AirAsia would be able utilize Rakuten's extensive domestic distribution channels, while Rakuten would be able to tap into the booming intra-Asian travel market through AirAsia. This partnership could become crucial, since Japan's general public prefers booking through travel agencies and participate in package tours, instead of purchasing tickets directly from airlines and making travel itineraries on their own.

AirAsia (AK/AXM) intends to hold 33%, the maximum possible figure under Japan's airline foreign ownership rules, while the remainder will be split among two to three companies including Rakuten. However, three would enable AirAsia to retain the highest share. Earlier this February, Mr. Fernandes had revealed that talks were underway involving 'like-minded' listed Japanese companies to invest up to 70 million USD in initial start-up capital. For their failed first try (Mk I), they had erred in giving ANA majority control at 67%.

AirAsia is currently using a legal vehicle named Air Innovation, which in March set up AAJR, the body that would become the new airline. AAJR was officially renamed AirAsia Japan on May 1st and registered their headquarters at Chubu Centrair (New AirAsia Japan to be based at Nagoya Chubu Centrair.). AirAsia's new Japanese unit will be led by CEO Yoshinori Odagiri, former CEO of AirAsia Japan (Mk I) (JW/WAJ) and CFO Osamu Hata, Dell's former Japan unit head (New AirAsia Japan names CEO; official launch in April.).

Reference: Toyo Keizai, June 26th. (in Japanese)
Reference: Nikkei Shimbun, June 26th. (in Japanese)
Reference: Asahi Shimbun, June 26th. (in Japanese)

New AirAsia Japan to be based at Nagoya Chubu Centrair.

AAJR, the temporary legal entity for the new Japanese arm of AirAsia (AK/AXM), officially changed its name to 'AirAsia Japan' (Mk II) and registered their headquarters at Nagoya/Chubu Centrair (NGO/RJGG) effective May 1st.

AirAsia Japan (Mk I) Airbus A320-214 JA01AJ lands at Narita in 2012. It is now with Indonesia AirAsia as PK-AZJ. (Photo: Aviation Wire)

The Malaysian LCC'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 All Nippon Airways (NH/ANA), only 10 months after launching operations in August 2012, due to disagreements over how the airline would be run and other complicated reasons. It ceased operations on October 26th, 2013, and re-launched as Vanilla Air (JW/VNL) under 100% ANA ownership on December 20th (Vanilla Air launches operations.). 

So, as rumored and probably the most realistic option, Nagoya has indeed been chosen. It is Japan's third largest metropolitan area with a population of 8.9 million, but has been relatively underserved, mostly due to the fact that it is connected with the mega-cities of Tokyo and Osaka with the super-efficient (but expensive) Shinkansen. ANA operates the bulk of routes and Japan Airlines (JL/JAL) has minimum presence, while niche carrier Fuji Dream Airlines (JH/FDA) maintains a hub at Nagoya/Komaki (NKM/RJNA), the older airport near downtown. The first AirAsia Japan (Mk I) also set up a hub three months prior to the failed JV's divorce, while sister AirAsia X (D7/XAX) currently serves the airport four-times weekly from Kuala Lumpur (KUL/WMKK).

Earlier this February, AirAsia Group's Director Tony Fernandes revealed that talks are underway involving up to three 'like-minded' Japanese companies listed on the stock exchange to invest up to 70 million USD in initial start-up capital. Rakuten, originally an IT venture and now Japan's largest e-commerce firm, has been rumored as a partner, but nothing has been disclosed. Foreign ownership of Japanese airlines is capped at 33%, but having three partners instead of one or two would enable AirAsia to retain the biggest share. For their failed first try, they erred in giving ANA majority control at 67%.

The reincarnation is being led by former AirAsia Japan (Mk I) (JW/WAJ) head Yoshinori Odagiri, who has been appointed CEO, and Osamu Hata, who previously worked with Dell's Japan unit and has been appointed CFO (New AirAsia Japan names CEO; official launch in April.). The new AirAsia Japan (Mk II) is expected to launch domestic and regional international flights with Airbus A320s from Chubu Centrair as early as first quarter of 2015 (AirAsia plans return to Japan in 2015.). With the Tokyo Olympics/Paralympics coming up in 2020, LCC-dedicated Ibaraki (IBR/RJAH) is being considered as a focus city serving the Greater Tokyo region, however, AirAsia officials who visited last month have been concerned about the airport's tiny size.

Source: Traicy, May 19th. (in Japanese)

AirAsia plans return to Japan in 2015.

Speaking at the New Economy Summit 2014 in Tokyo on April 10th, AirAsia Group CEO Tony Fernandes revealed that a new joint-venture (JV) in Japan would be set up and be operational in 2015. "Everyone wants to come to Japan. We're going to make affordable and Japanese love to travel so I'm very bullish," Mr. Fernandes said.

AirAsia CEO Mr. Tony Fernandes speaking at the New Economy Summit 2014. (Photo: Aviation Wire)

Mr. Fernandes told the media that he had found "fantastic partners" who are "more like-minded," and "bright in technology, can talk to the government on equal terms, and revolutionize the Japanese market," though he refrained from disclosing any names. Asked by media whether Hiroshi Mikitani, CEO of Rakuten, is involved, Mr. Fernandes replied "he's a friend, and it might be better for us to remain only friends." Originally an IT venture, Rakuten is now Japan's largest e-commerce firm and a multinational internet business, and has been rumored to be AirAsia's partner.

As to where the new JV would be based, AirAsia has been searching for an airport that meets the following criteria; (1) open 24 hours and not slot-restricted, (2) minimum travel disruptions due to weather, (3) low-cost, and (4) not a hub for other LCCs. This essentially leaves Nagoya's Chubu Centrair (NGO/RJGG) as the top candidate, however, with 2020 Tokyo Olympics/Paralympics on the horizon, they are also eager to open a base in the Greater Tokyo area, and AirAsia officials visited Ibaraki (IBR/RJAH), a one-and-a-half-hour bus ride from Tokyo Station, also on April 10th. In other regions, Kobe (UKB/RJBE) and Sendai (SDJ/RJSS) are also being considered for focus cities.

Mr. Fernandes added "Haneda and Narita are too slot-restricted and too costly," and went on to say "Japan wants to increase visitors from overseas (to 20 million by 2020), but they're not building a LCC airport. Instead of trying to do something with Narita, why not build a new LCC-dedicated airport?"

Former AirAsia Japan (Mk I) CEO Mr. Yoshinori Odagiri will also head the new AirAsia Japan (Mk II). (Photo: Aviation Wire)

On February 13th, Mr. Fernandes mentioned on Twitter that they had named former AirAsia Japan (Mk I) (JW/WAJ) head Yoshinori Odagiri its CEO for the new AirAsia Japan (Mk II), along with naming Osamu Hata, who previously worked with Dell's Japan unit, its CFO (New AirAsia Japan names CEO; official launch in April.).

Their first AirAsia Japan (Mk I), a JV with All Nippon Airways (NH/ANA), was terminated last year only 10 months after starting operations in August 2012, due to complicated reasons including differences in how the airline would be run. It ceased flights in October 2013 (CoachFlyer JW8541: NRT - FUK on AirAsia Japan's Airbus A320.) and relaunched as Vanilla Air (JW/VNL) two months later (Vanilla Air launches operations.) under 100% ANA control. "For ice cream, you need chocolate and raspberry, not only vanilla," Mr. Fernandes referred to the former JV in a sarcastic manner. Talking about its first Japanese incarnation, "It was a nightmare, and probably for ANA too," he recalls, adding "We've always worked as one captain of the ship. When you have two airlines, there are two views on how to do things."

The group's long-haul arm AirAsia X (D7/XAX) launched flights to Chubu Centrair on March 17th, making it their third Japanese destination after Tokyo/Haneda (HND/RJTT) and Osaka/Kansai (KIX/RJBB). Although delays with its India venture in obtaining an air operator's permit (AOP) seem to be having some effect, nevertheless, AirAsia is expected to make a formal announcement for the reincarnation of a Japanese unit later this month or May. "We shall return like Caesar," Mr. Fernandes is bullish, adding "this could be – and I still believe it, it's a strong statement – probably the most profitable company within AirAsia".

Source: Asahi Shimbun, April 10th. (in Japanese)
Source: Traicy, April 10th. (in Japanese)
Source: Mainichi Shimbun, April 10th. (in Japanese) 
Source: Aviation Wire, April 10th. (in Japanese)

*Post edited/updated on April 11th.