Japan’s Budget Airlines Are Going Through Difficult Times

Japan’s normally vibrant aviation market is under pressure this year. Over 100 million people were expected to take to the air around Japan in 2020. But the travel downturn has seen that sunny forecast slashed. Now, with would-be passengers staying on the ground and revenues evaporating, Japan’s budget airlines are going through some difficult times.

Japan’s normally vibrant airline market is under pressure. Photo: Getty Images

A normally vibrant airline market in the doldrums

For many years, local powerhouse airlines Japan Airlines and All Nippon Airways had a firm grip on Japan’s aviation scene. More recently, budget airlines have burst onto the scene. At the start of 2020, over a dozen airlines competed for domestic passengers in Japan. Ten months later, with domestic passenger numbers down 70%, it’s a case of too much supply and not enough demand.

It’s worth noting that deep pockets back many of these new-ish budget airlines. Japan Airlines and All Nippon Airways have financial stakes in many of them. For example, Japan Airlines has a minority stake in Jetstar Japan and a controlling interest in Zipair Japan. All Nippon Airways has a controlling interest in Peach and a minority interest in Skymark. These stakes allow the legacy carriers to have some control over market disruptions.

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Peach on one of several budget airlines in Japan having a tough year. Photo: Airbus

AirAsia Japan wraps up operations

One of the few genuinely independent budget airlines in Japan is AirAsia Japan. But in a sign of how tough things are, the airline ceased operations last week. AirAsia Japan called the decision painful, saying it was the result of a thorough business review.

“We have concluded that it would be an extremely challenging feat for us to continue operating without any visibility and certainty of a post-pandemic recovery path,” said an AirAsia Japan spokesperson.

This decision will see AirAsia Japan end its four domestic routes in Japan. It will not impact international services into Japan operated by other airlines in the AirAsia franchise.

Jetstar Japan is also winding back its services. The Narita-based budget airline is suspending one-quarter of its routes over the northern 2020/21 winter season. The airline is also actively looking to reduce its workforce.

AirAsia Japan has ended its local operations. Photo: Getty Images

Zipair Tokyo finally takes to the air with passengers onboard

Amid this turbulent environment, Zipair Tokyo is trying to get off the ground. The Japan Airlines subsidiary was due to start flying in May. There have been a few flights since then – for cargo. Now, Zipair Tokyo is finally taking off with passengers onboard. The airline is due to start flying between Narita and Seoul this week. It’s a gentle start with just two return services a week.

Meanwhile, Japan’s legacy airlines are also having a time tough of it in 2020. Japan Airlines is canceling 26% (or 6,722) domestic flights in November, fewer flights than they canceled in October. Competitor All Nippon Airways has canceled 29% (or 6,337) of its domestic flights in November.

The premium airlines say while domestic travel demand is still bad, it is slowly improving. Month by month, fewer flights are getting canceled in Japan. But the crisis is far from over. Both airlines are looking to cut employee numbers, reduce costs, and diversify their operations.

That the Japanese Government is actively looking to continue its support for its homegrown airlines also suggests there’s a way to go before aviation in Japan hits clear air again.