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.  

New AirAsia Japan receives AOC; takeoff in April 2016.

On October 6th, AirAsia Japan (Mk II) [DJ] was officially granted an Air Operator's Certificate (AOC) from Japan's Ministry of Land, Infrastructure, Transport, and Tourism (MLIT). It had filed an application on July 21st (AirAsia Japan confirms Spring 2016 launch from Nagoya.). Japan's newest LCC will launch operations in early April 2016 from its Nagoya/Chubu Centrair [NGO/RJGG] hub (AirAsia Japan selects Nagoya Chubu Centrair.) to Sapporo/New Chitose [CTS/RJCC], Sendai [SDJ/RJSS] (New AirAsia Japan mulls Nagoya – Sendai.), and Taipei/Taoyuan [TPE/RCTP] using an initial fleet of two 180-seat Airbus A320s. Its two-letter IATA code will be DJ.

The new AirAsia Japan's (Mk II) first aircraft Airbus A320-216(SL) JA01DJ/F-WWBV at Hamburg/Finkenwerder. It will be delivered shortly and is planned to arrive at Nagoya's Chubu Centrair on October 16th. (Photo: Tobias Gudat)

All three routes will start off with two daily round-trips, and details of their flight schedule will be released in late November, which will coincide with ticket sales start. The Japanese unit of Asia's largest LCC group aims to offer fares at approximately half or third of the price of full-service carriers such as All Nippon Airways [NH/ANA] and Japan Airlines [JL/JAL]. AirAsia Japan's (Mk II) initial expansion will focus on international destinations already served by an AirAsia Group carrier and within a four-hour radius from Chubu Centrair, with domestic routes following afterwards. It sees itself eventually flying 55% international and 45% domestic.

"We're targeting both inbound and domestic visitors. The Chubu (Greater Nagoya) region also has a population of 15 million, so there should be much more demand," said Yoshinori Odagiri, CEO of AirAsia Japan (Mk II), adding "For Sendai, those from abroad want to see Sakura in the spring and snow in the winter, and it's becoming popular among the Japanese too. If we can create demand and increase to four or five flights a day, it may become more appealing to business travelers as well." Sendai will be an all-new city on AirAsia Group's network; New Chitose is served by AirAsia X [D7/XAX] and Taipei/Taoyuan by both AirAsia [AK/AXM] and the AirAsia X.

AirAsia Japan (Mk II) has built Red Base, its headquarters and the base for other AirAsia Group activities in Japan, on the grounds of Nagoya Chubu Centrair. A 180-room low-cost hotel is also being erected at the airport by affiliate Red Planet Japan on behalf of Tune Hotels. (Photo: Aviation Wire)

"We are very excited to be back in Japan. We have fantastic partners here and we are united in the vision to change the way people travel in Japan," commented AirAsia Group CEO Tan Sri Tony Fernandes, going on to say "Centrair is a fantastic base and with our new routes, we look forward not only to enable the Japanese to enjoy our direct destinations but to connect them to the rest of Asia and beyond on our extensive network." The group's Malaysian long-haul arm is looking at resuming service to Chubu Centrair, along with Thai AirAsia X [XJ/TAX] as well, when ICAO's red flag on Thailand is lifted, to feed the Japanese unit's network.

Its first aircraft, A320-216(SL) JA01DJ, will arrive at Chubu Centrair on October 16th, having completed its first flight on July 7th and currently awaiting delivery at Toulouse/Blagnac [TLS/LFBO]. AirAsia Japan's (Mk II) A320s will be supplied from the huge AirAsia Group order pool, and they plan on building its fleet to six by the end of 2016. Five aircraft will be added each year onwards; 11 aircraft by the end of 2017 and 16 by the end of 2018. If demand warrants, they have the option to add two additional A320s by the end of 2018. Its headquarters were officially moved to its brand-new Red Base at Chubu Centrair effective September 29th, and the first batch of crews have already started training in Malaysia. The current workforce of 100 will be increased to around 250 by April 2016.

AirAsia Japan (Mk II) (AirAsia Japan is officially reborn; first flight June 2015.) also completed a shareholding structure reorganization on September 25th. Voting-rights-wise, AirAsia Investment's 33% and Rakuten's 18% ownership haven't changed, while Noevir Holdings' shareholding has been increased from 13.4% to 18% and Alpen from 7.4% to 18%, with FinTech Global Trading, a new investor, now holding 13%. Meanwhile, Octave Japan Infrastructure Fund no longer holds any voting stocks, though it will retain non-voting shares. This is AirAsia Group's second crack into the Japanese market; the original AirAsia Japan (Mk I) [JW/WAJ] (CoachFlyer JW8541: NRT - FUK on AirAsia Japan's Airbus A320.) ended in a divorce with joint-venture (JV) partner ANA Holdings due to managerial differences only 10 months after launching operations. That company now operates as Vanilla Air [JW/VNL] (Vanilla Air launches operations.) under 100% ANA control.

Source: The Star (Malaysia), 2015 October 6th. (in Japanese)
Source: Aviation Wire, 2015 October 6th. (in Japanese)

AirAsia Japan confirms Spring 2016 launch from Nagoya.

On July 21st, AirAsia Japan (Mk II) officially applied for an Air Operator's Certificate (AOC) with the Japan Civil Aviation Bureau (JCAB). Although a change in business strategy along with rigorous document preparations have resulted in an eight-month delay (AirAsia admits Skymark bid defeat, Japan unit delay to 2016.), the regulator is expected to grant permission as early as October. The reincarnation of AirAsia's Japanese unit will launch operations in March or April 2016 with both domestic and international routes from Nagoya/Chubu Centrair [NGO/RJGG] using 180-seat Airbus A320s (AirAsia Japan selects Nagoya Chubu Centrair.).

Seen departing Fukuoka in October 2013, AirAsia Japan's (Mk I) Airbus A320-214 JA02AJ has since been transferred to Indonesia AirAsia as PK-AZI. The first aircraft for AirAsia Japan (Mk II), A320-216(SL) JA01DJ (MSN 6702), has already completed its maiden flight from Toulouse. (Photo: Ryosuke Yano)

Its initial routes are expected to be Fukuoka [FUK/RJFF], Sapporo/New Chitose [CTS/RJCC], and Seoul/Incheon [ICN/RKSI], all former routes of the defunct first AirAsia Japan (Mk I) [JW/WAJ] (CoachFlyer JW8541: NRT - FUK on AirAsia Japan's Airbus A320.). Sendai [SDJ/RJSS] (New AirAsia Japan mulls Nagoya – Sendai.) and Taipei/Taoyuan [TPE/RCTP] will be added shortly after. Japan's latest LCC will establish regional international routes before adding more domestic destinations. Routes will officially be revealed in November, followed shortly by ticket sales start. Sister AirAsia X [D7/XAX], which suspended Kuala Lumpur/Sepang [KUL/WMKK] – Chubu Centrair in February, will also reinstate the link and help feed the Japanese unit.

AirAsia Japan (Mk II) will start with a pair of A320s supplied from the huge AirAsia Group order pool, and plans to build its fleet to six by the end of 2016. Five aircraft will be added each year onwards; 11 aircraft by the end of 2017 and 16 by the end of 2018. If demand warrants, they have the option to add two additional A320s by the end of 2018. All of the planned machines are too much for just the Nagoya market, and AirAsia Japan (Mk II) will continue to push for daytime slots at heavily-regulated Tokyo/Haneda [HND/RJTT]. Their first attempt failed when AirAsia's [AK/AXM] bid for bankrupt Skymark Airlines [BC/SKY] was rejected (ANA and AirAsia bid to save Skymark.). The government is willing to expand Haneda's slots as soon as it reaches accords with business districts and densely-populated areas where aircraft will overfly, hopefully in time for the 2020 Tokyo Olympics/Paralympics.

Nagoya is the third largest metropolitan area in Japan, however, its proximity to the Kansai (Greater Osaka) region and Osaka/Kansai [KIX/RJBB] has left Chubu Centrair underutilized. Along with Kansai, Chubu Centrair is also a 24-hour airport but with ample slots available, and AirAsia Japan (Mk II) is initially staying away from hotly-contested Kansai, which sees Peach Aviation [MM/APJ] and Jetstar Japan [GK/JJP] (Jetstar Japan launches Kansai hub.) established along with a plethora of foreign LCCs competing. However, overlaps will come in due course as all LCCs continue to expand, and some rivalry is inevitable as Jetstar Japan already operates from Chubu Centrair to Fukuoka, Kagoshima [KOJ/RJFK], Kumamoto [KMJ/RJFT], Okinawa/Naha [OKA/ROAH], and New Chitose (Jetstar Japan commences Nagoya – Okinawa.).

Leading AirAsia Japan (Mk II) is CEO Yoshinori Odagiri, who also headed the first version of the Japanese unit. Although originally an ANA veteran, he has since departed Japan's largest carrier to pursue "unfinished business" under the AirAsia brand. (Photo: Aviation Wire)

AirAsia Group CEO Tan Sri Tony Fernandes had said that AirAsia Japan (Mk II) would likely become the biggest contributor to the budget airline group within the next few years as it formed a cornerstone for the network's global aspirations. "With Japan, we don't only need to limit ourselves to Asia. Flights to Vancouver in Canada and Hawaii and the U.S. west coast are now possible. This means we're well on our way towards becoming a global airline," adding "Japan and India are key for us as they can be launching pads for expansion beyond Asia." Keeping up to Mr. Fernandes' ambitions, AirAsia X [D7/XAX] has applied to extend its Kuala Lumpur – Kansai link to Honolulu [HNL/PHNL] for launch as early as November. It would be a litmus test before launching direct flights to the U.S. west coast.

AirAsia Japan (Mk I) was a joint-venture with All Nippon Airways' [NH/ANA] parent ANA Holdings, which was terminated in June 2013 over differences in decision-making. It was subsequently re-branded Vanilla Air [JW/VNL] under full ANA control (Vanilla Air launches operations.). AirAsia's Japanese unit was officially reborn last July under the leadership of CEO Yoshinori Odagiri, who also headed the first incarnation, and CFO Osamu Hata, who previously worked with Dell Japan (AirAsia Japan is officially reborn; first flight June 2015.). Shareholding-wise, Malaysia's AirAsia controls 49%, Octave Japan Infrastructure Fund 19%, Rakuten 18%, Noevir Holdings 9%, and Alpen 5%, though voting-rights-based, AirAsia will hold 33%, the maximum allowed under Japan's current foreign ownership laws, while Octave will have 28.2%, Rakuten 18%, Noevir 13.4%, and Alpen 7.4%.
 
Source: Rakyat Post, 2014 July 16th. (in English)
Source: Toyo Keizai, 2015 July 21st. (in Japanese)
Source: Aviation Wire, 2015 July 21st. (in Japanese) 
Source: Nikkei Shimbun, 2015 July 21st. (in Japanese)

AirAsia admits Skymark bid defeat, Japan unit delay to 2016.

AirAsia Group has likely lost the bid to sponsor bankrupt Skymark Airlines [BC/SKY] (Skymark to file for bankruptcy.), according to Tony Fernandes, group CEO of the Malaysia-based pan-Asian LCC. Several reliable sources confirmed on April 18th that Japan's embattled third largest carrier had selected ANA Holdings, parent of All Nippon Airways [NH/ANA], from over 20 sponsorship proposals (Skymark accedes to ANA investment.). AirAsia [AK/AXM] was the only other airline that had submitted a plan (ANA and AirAsia bid to save Skymark.). 

Airbus A320-216(SL) JA04AJ of AirAsia Japan (Mk I) arrives at Chubu Centrair on delivery on March 29th, 2013. It now flies with AirAsia (Malaysia) as 9M-AQX. The failed original joint-venture (JV) between AirAsia and ANA had also designated Nagoya a hub, but is Kansai also on the cards for the second incarnation? (Photo: Aviation Wire)

"We had a look at it, but I think we lost that... it's complicated, so we don't think our suggestion is going to go through," Mr. Fernandes told during an interview at the World Economic Forum in Jakarta on April 19th. ANA Holdings will control just under 20% in Skymark, effectively putting the carrier's lucrative 36 domestic slot-pairs at heavily-regulated Tokyo/Haneda [HND/RJTT] at the disposal of Japan's largest airline. "It's a protective measure," said Shinya Katanozaka, President of ANA Holdings, which would now dominate 60% of Haneda's domestic slots, including those of similarly part-owned de facto subsidiaries AIRDO [HD/ADO] (d.b.a. Air Do), Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air), and Star Flyer [7G/SFJ]. 

"I don't think that's good for Japan. They're going to end up with two airlines (ANA & JAL), really. And so hopefully AirAsia Japan (Mk II) can inject a little more choice," Mr. Fernandes said, again adding "We were really interested in Skymark, but I don't think it's going to happen." Along with ANA and Japan Airlines [JL/JAL], Japan's governing Liberal Democratic Party (LDP) is opposed to foreign presence in Haneda's domestic market, let alone a LCC with foreign affiliation, making it difficult for overseas carriers to invest in carriers holding slots at the downtown Tokyo airport. And the LDP wanting to portrait then-Democratic Party of Japan (DPJ)-controlled government's massive bailout of JAL from their 2010 bankruptcy a misuse of taxpayer's money put ANA in the only position to assist Skymark. Tokyo/Narita [NRT/RJAA], which opened its LCC terminal earlier this month (Narita opens Tokyo's LCC gateway: Terminal 3.), is also lobbying against letting LCCs into Haneda.

Mr. Fernandes, who was named as one of the 100 most influential persons in the world by TIME magazine, also admitted that AirAsia Japan's (Mk II) (AirAsia Japan is officially reborn; first flight June 2015.) launch would be delayed to early 2016 due to certification by the Japanese regulators taking much longer than expected. "We're going through the application process now, and we're very confident in our model. It has taken longer, because I think there are a few more airlines, and the regulators want to go through all their rules and regulations, but we're on schedule to start early next year," confirmed Mr. Fernandes. Their first aircraft was due this summer (New AirAsia Japan's first Airbus A320 due in July.) with a potential hub at Nagoya/Chubu Centrair [NGO/RJGG] (AirAsia Japan selects Nagoya Chubu Centrair.), though Osaka/Kansai [KIX/RJBB] is also a possibility now that sister AirAsia X [D7/XAX] has applied for a link between Kuala Lumpur/Sepang [KUL/WMKK] and Honolulu [HNL/PHNL] via Kansai.

Source: CNBC, April 20th. (in English)

Skymark hints at new brand: SKY bee?

Bankrupt Skymark Airlines [BC/SKY] (Skymark to file for bankruptcy.) confirmed that it will change its name and livery, and revamp their product along with staff uniforms. The re-branding could take place as early as late July, which is when their corporation rehabilitation plan would be implemented, provided it wins majority approval from creditors (Skymark's total debts skyrocket to 300 billion JPY.) at a meeting to be held in late June. The plan must be submitted to the Tokyo District Court, where it filed for bankruptcy protection, by May 29th.

Boeing 737-82Y(WL) JA737Z arrives at Ishigaki as flight BC567 from Naha on March 28th as Skymark's last flight to the southern Okinawa airport. Along with Miyako, it was dropped as part of their restructuring. (Photo: Aviation Wire)

"We want to think from zero," said Nobuo Sayama, President of Integral Corporation, in a weekend news program, revealing SKY bee is one of their top candidates for the new identity. Together with advertising agencies Sunny Side Up and TYO, the investment fund, which has pledged 9 billion JPY to keep the cash-strapped airline flying while it reorganizes (Skymark to cut 15% of flights, ground all Airbus A330s.), disclosed a logo that uses a hornet. On April 6th, Skymark's President Masakazu Arimori confirmed "We have come a long way, so we want to renew the airline. We can't tell if it will be SKY bee, but SKY will remain part of it."

Meanwhile, the selection of sponsors to help Skymark out of bankruptcy (Skymark seeks investor airline; scraps ANA & JAL dual tie-up.) is taking much longer than expected. "If there is an airline who is sincerely willing to help rebuild Skymark, we would like to work with them," said Mr. Sayama, implying their view of both bidders AirAsia [AK/AXM] and ANA Holdings, parent of All Nippon Airways [NH/ANA] (ANA and AirAsia bid to save Skymark.), as having no genuine interest in Skymark except for the lucrative 36 slot-pairs Japan's third largest carrier controls at Tokyo/Haneda [HND/RJTT]. "If our employees don't feel comfortable about the sponsor, we won't get along," reiterating that Integral is prepared to become its sole sponsor, taking full control of Skymark's rehabilitation.

On March 30th, ANA Holdings' new President Shinya Katanozaka said "We can't let a competitor slip away with the slots," adding "That would be detrimental to our business." So that Skymark wouldn't need to relinquish its precious slots, ANA would keep its investment under 20%, but "Partnering without shareholding is out of question," said Mr. Katanozaka, adding "We need to be at the center of their restructuring." The Ministry of Land, Infrastructure, Transport, and Tourism (MLIT), which regulates Haneda, has notified they would limit any ANA investment to five years, in an effort to keep Skymark as Japan's third force, but ANA's chief opposes "It took over a decade to get rid of AIRDO's [HD/ADO] (d.b.a. Air Do) and Skynet Asia Airways' [6J/SNJ] (d.b.a. Solaseed Air) debts, so in that event we will urge MLIT to lift that."

AirAsia Group's CEO Tony Fernandes is also expected to visit Tokyo soon to pitch his proposal to the embattled airline. According to people close to the matter, the chief of Asia's largest LCC group will present details of a plan to help Skymark settle penalties charged by Airbus and aircraft lessors for the canceled A380s (Skymark's Airbus A380 order in jeopardy.) and A330s (Skymark terminates all Airbus A330 leases.) as well as cooperate on operations, and discuss a potential future investment. "Our plan guarantees Skymark's independence," said the source. Meanwhile, a Skymark spokesperson said "We haven't talked in detail, so at this point we can't say if AirAsia's plan is acceptable or not." Mr. Fernandes is also busy with AirAsia Japan (Mk II), which is currently preparing to launch operations from Nagoya/Chubu Centrair [NGO/RJGG] by the end of this year (New AirAsia Japan eyes launch by year-end 2015.).

However, with Skymark starting to tweak its product, including overhauling its brand, it may actually decide to go without any airline sponsors after all. Check-in baggage allowance has been increased from 15 to 20 kilograms, while stricter cosmetics and hairstyle rules for flight attendants have been implemented, which at least don't seem to go in the direction of a LCC. But opting not to name any airline sponsors is likely to have a negative effect on their negotiation power with creditors in reducing their huge debt (Skymark's total debts skyrocket to 300 billion JPY.). Stay tuned.

Source: Reuters Japan, March 31st. (in Japanese)
Source: Jiji Press, April 1st. (in Japanese)
Source: Mainichi Shimbun, April 4th. (in Japanese)
Source: Aviation Wire, April 6th. (in Japanese) 
Source: Nikkei Shimbun, April 7th. (in Japanese)

*Edited/updated on April 7th, 2015.

New AirAsia Japan eyes launch by year-end 2015.

AirAsia Japan (Mk II) hopes to launch operations "by the end of 2015," according to AirAsia Group CEO Tony Fernandes in an interview carried out by Nikkei Shimbun. Mr. Fernandes admitted that paperwork preparations with Japan's Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) are taking more time than expected. Original plans had set an in-service target for June.

Airbus A320-214 JA02AJ of the first AirAsia Japan (Mk I) basks in the sun at Narita. The aircraft now flies with Indonesia AirAsia as PK-AZI. The new AirAsia Japan (Mk II) will be based at Nagoya's Chubu Centrair. (Photo: Aviation Wire)

"We are the only LCC with a network covering all of Asia. Look at our name. We are AirAsia. Myanmar, Laos, and Cambodia are also on our horizon. Japan would be our North Asia hub and India our South Asia hub. We will continue to expand our network as Asia's largest LCC. 2015 will see us fly to Sapporo, Hawaii, and London," said Mr. Fernandes, reiterating the importance of Japan. The reincarnation of AirAsia Japan (Mk II) is also part of a strategy to shift dependence from Southeast Asia, where the market is becoming saturated and competition is fiercer than ever.

Meanwhile, the new Japanese unit has started hiring flight attendants. Applicants must have at least one year of experience and are required to go through a two-month training program in Malaysia sometime after May 2015. The airline is also requiring them to live within a radius of an hour commuting time by public transportation from Nagoya/Chubu Centrair [NGO/RJGG] or another airport the company specifies. Applicants will be hired as trainees and will become contract employees upon completion of training and qualification. Applications will be accepted from January 8th to February 1st. 

Headed by Yoshinori Odagiri, former CEO of the first incarnation, AirAsia Japan (Mk II) was officially relaunched last summer (AirAsia Japan is officially reborn; first flight June 2015.) with an initial capital totaling 7 billion JPY from AirAsia [AK/AXM] (49%), Octave Japan Infrastructure Fund (19%), Rakuten (18%), Noevir Holdings (9%), and Alpen (5%). The Malaysia-based LCC group's first crack at the Japanese market with AirAsia Japan (Mk I) [JW/WAJ] (CoachFlyer JW8541: NRT - FUK on AirAsia Japan's Airbus A320.) ended in a divorce with joint-venture (JV) partner ANA Holdings due to managerial differences only 10 months after launching operations in August 2012. It now operates as Vanilla Air [JW/VNL] under 100% ANA ownership.

Will some employees defect Vanilla Air to join the new AirAsia Japan (Mk II)?

Source: Nikkei Shimbun, December 26th. (in Japanese)
Source: AirAsia Japan, January 8th. (in Japanese)

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)

AirAsia Japan is officially reborn; first flight June 2015.

On July 1st, AirAsia Group CEO Tony Fernandes formally announced the launch of AirAsia Japan (Mk II) at a press conference in Tokyo. The newest unit of the Malaysia-based pan-Asian LCC group was officially formed on this day, with Mr. Fernandes saying "This is Part 2 of AirAsia Japan's performance, and it will be the last. We will bring Japan and the rest of Asia closer by offering affordable fares." First revenue flight is to take place in summer 2015.

Yoshinori Odagiri, AirAsia Japan (Mk II) CEO; Tony Fernandes, AirAsia Group CEO; and Hiroshi Mikitani, President of Rakuten (black shirt). (Photo: Aviation Wire)

An initial capital of 7 billion JPY has been raised from five investors; Malaysia's AirAsia (AK/AXM) accounts for 49%, Octave Japan Infrastructure Fund 19%, Rakuten 18%, Noevir Holdings 9%, and Alpen 5%. According to voting-rights, 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%. "We are very excited to return to Japan's skies together with Octave, Rakuten, Noevir and Alpen this time round. I am more confident than ever that AirAsia Japan, led by Odi (Odagiri Yoshinori) with the strong partnership we have with our new investors, will continue to realize our vision to revolutionize the low-cost carrier segment of Japan," Mr. Fernandes said.

Octave was incorporated in Japan in May 2014 and its major business is to manage the shares of AirAsia Japan. Rakuten (AirAsia and Rakuten to announce AirAsia Japan on July 1st.) was an IT venture originally founded in February 1997 but now Japan's largest e-commerce firm, with other major businesses including financial services, telecommunications, and professional sports, owning the Tohoku Rakuten Golden Eagles baseball team. Noevir is involved in the cosmetics, pharmaceuticals, and health food and apparel industry. Alpen has been producing a wide range of sports equipment from ski, golf, tennis, marine sports, and baseball since 1972, and it also manages ski resorts, golf courses, and fitness clubs.

From top-left to right: Taizo Mizuno (President of Alpen), Hiroshi Mikitani (President of Rakuten), Yoshinori Odagiri (CEO of AirAsia Japan), Tony Fernandes (CEO of AirAsia Group), and Takashi Okura (President of Noevir Holdings). (Photo: Mynavi)

"If you look around the world, LCCs are stimulating air travel. Their share has grown to around 50% in Southeast Asia, but still only accounts for 3% in Japan. The country is now moving to increase foreign visitors to 20 million by 2020 (when the Tokyo Olympics/Paralympics take place). LCCs will play a pivotal role in surpassing that milestone and will also contribute to the country's economy," Mr. Mikitani said, adding "We are simply a shareholder supporting AirAsia's growth in Asia." Being a personal friend of Mr. Fernandes as well, he also said, "From in-flight entertainment to shopping and payments, the airline market has lots of possible synergies with IT. E-commerce partnerships are possible in the long-term."
 
CEO of AirAsia Japan (Mk II) is Yoshinori Odagiri (New AirAsia Japan names CEO; official launch in April.), who also headed the first incarnation. The failed 10-month joint-venture (JV) between AirAsia and All Nippon Airways (NH/ANA) has since relaunched as Vanilla Air (JW/VNL) (Vanilla Air launches operations.) under full ANA control. Starting out his aviation career with ANA back in 1987, Mr. Odagiri quit ANA and AirAsia Japan (Mk I) in August 2013, two months after the JV was dissolved (operations under the AirAsia brand continued through October 26th), and joined AirAsia the following month to help re-launch the red brand in the country of the rising sun. 

"AirAsia Japan has returned," Mr. Odagiri enthused, telling that operations will start as early as June 2015 on domestic routes, followed by regional international flights. An initial fleet of two 180-seat Airbus A320s will be sourced from AirAsia Group's huge order pool, with four planned by the end of 2015. Five will be added each year after that.

Some of AirAsia Japan's aircraft will feature special liveries designed by photographer and film director Mika Ninagawa. (Image: Mika Ninagawa)

Asked about their hub, Mr. Odagiri answered "Nagoya was chosen (New AirAsia Japan to be based at Nagoya Chubu Centrair.) for initial registration purposes. We will formally announce a hub in due course," adding "We will start from a non-Tokyo city, but Tokyo is a very big market that cannot be omitted. The (Japanese) government is considering increasing slots at Haneda, and we certainly would like to receive some." He went on to say "We first need to stabilize our business by producing profits on trunk (domestic) routes, and after that, we hope to enter the under-served rural (domestic) markets."

Regarding pilot shortages which have plagued LCCs Peach Aviation (MM/APJ) (Peach outlines Summer 2014 mass cancellations.) and Vanilla Air (Vanilla Air cancels 154 flights in June due to pilot shortage.) with mass cancellations, Mr. Odagiri said "We want to plan well, including crew sourcing from the group's other airlines."

Speaking about the Tokyo/Narita (NRT/RJAA)-based LCCs struggling to turn profits, Mr. Fernandes commented "Because they're based at high-cost Narita. And Haneda is not far away. If we take a different approach, we believe we can produce a profit in five or six years." He also said "What we learned the first time is that we should work with like-minded people. We make decisions very quickly. We'll do better than partnering with huge established corporations." For the failed first attempt, AirAsia erred in giving majority control to ANA, which made the move mostly to prevent AirAsia from partnering with other companies. As Mr. Mikitani's statement implies, AirAsia is at the controls this time, and the other investors are only supporters.

AirAsia's distinctive red flight attendants. Noevir will reportedly supply their cosmetics. (Photo: Mynavi)

"We are ready to take on this challenge and with great teamwork, we hope to bring AirAsia's successful low-cost business model once again to Japan. Our counterparts in Malaysia, Thailand, Indonesia, the Philippines, and India have seen great and encouraging responses in their markets, and we will work towards the same for Japan. We would like to thank the investors for their belief in us and we look forward to working closely with them moving forward," said Mr. Odagiri.

Now AirAsia Japan (Mk II) would be the fifth LCC in an already increasingly crowded market. Is market consolidation (any eliminations?) coming up in the not-too-distant future? Vanilla Air, though wholly-owned by ANA, seems to be the weakest. Further, just of note, Vanilla Air has dozens of staff who were inspired by AirAsia and Mr. Fernandes and said they "would like to work with a future AirAsia," when the first JV was dissolved. Now that their former direct boss (Mr. Odagiri) has moved to restart the red brand, will a brain-drain happen at Vanilla Air?

Reference: Traicy, July 1st. (in Japanese)
Reference: Reuters Japan, July 1st. (in Japanese)
Reference: MyNavi, July 1st. (in Japanese)
Reference: Aviation Wire, July 1st. (in Japanese)