Air Lease Corporation has delivered a new Airbus A320neo to Japanese budget carrier Peach this week. The plane is the first of four on order with the lessor, including one more A320neo and two A321LRs. Peach is an all-Airbus A320 airline and only began taking delivery of the newer A320neo this year.

Modernizing the fleet

The delivery from Air Lease Corporation (ALC) comes as Peach adds the newer A320neo aircraft to its fleet. Until September, Peach only operated a fleet of A320-200s, which while new, are less efficient than the A320neo. The airline now has two of the type in its fleet.

Peach is also looking to take delivery of another popular Airbus aircraft: the A321LR. In 2018, the airline converted a previous A320neo order for two of the long-range (LR) variant, allowing it to access new international markets and carry more passengers. The A321LRs will also come from ALC, with deliveries scheduled for 2021 and 2022.

In a statement, ALC Executive Chairman Steven F. Udvar-Házy said,

"This most recent transaction by ALC in the Japanese market demonstrates our commitment to environmental sustainability with the most modern, fuel-efficient aircraft.  ALC is honored to contribute to Peach’s growing all-Airbus A320 fleet and we are confident that our A320-200neo and A321neo LR aircraft will greatly enhance the airline’s operations in its domestic and international market."

Budget roots

Peach Aviation is a budget carrier owned by ANA, Japan's largest airline. The airline operates out of Osaka Kansai International Airport, with bases in Tokyo Narita, Naha Airport, and others. Peach currently flies to 28 destinations within Japan and 17 international routes. All of its international routes are currently in East Asia, including Shanghai, Seoul, Bangkok, and more.

The addition of the A321LR could open up more doors for Peach, including routes to South and Central Asia. However, 2020 has been a difficult year for Japanese budget carriers as demand fell sharply.

Tough year

Japan usually has a bustling domestic market, only third in size to the US and China. But this year's events have seen demand fall by nearly 70%, forcing airlines to scale back their operations significantly. With international demand nascent and domestic demand falling, Peach has been looking for new sources of revenue.

The carrier recently began offering sightseeing and learning trips to school children in Japan, hoping to see an improvement in its finances. These flights will be "flights to nowhere," simply allowing children to enjoy flying on a school trip.

This year has been particularly harsh for budget airlines, which also have less capacity to carry cargo. The lack of long-range freighter aircraft restricts the airline's ability to increase revenue through cargo (prices of which have jumped recently).

However, with a vaccine rollout around the corner and the Tokyo Olympics scheduled for July 2021 could be a rebound year for Peach and other Japanese carriers.