Japan Airlines to Potentially Launch Budget Airline Before Tokyo Olympics

Japan Airlines officials admit to actively exploring the possibility of creating a budget airline subsidiary, but insist that plans have not yet been finalized.

Facing increasing competition from low-cost carriers, Japan Airlines (JAL) may be looking to start a budget airline of its own as a means to increase capacity and prevent existing low-fare airlines from gaining a solid foothold on the international routes serving Japan. Initial plans reportedly call for the as-yet-unnamed economy airline to avoid direct competition with existing JAL service.

Japan Airlines already owns a substantial stake in the highly successful low-fare, economy airline JetStar Japan. Analysts say, however, that the aspirations of Japan’s second-largest airline for rapid growth across the entire Asian air travel markets are not well-served by the association with JetStar, which has a route map comprised primarily of domestic flights with international flights tightly focused on hubs in Singapore and Australia.

This week, JAL Vice Chairman Junko Okawa told Bloomberg’s Kyunghee Park that the company is eyeing a new low-cost carrier as both a means to expand the company’s international presence and to help the airline compete with the threat posed by its budget rivals in the region. Okawa said that while JAL is eager to boost overall capacity ahead of the scheduled 2020 Summer Olympic Games, no final decision has been made on whether or not that expansion will include a new ultra-low-cost carrier.

JAL’s aggressive plans come less than a year after the company was released from government oversight put in place following the airline’s bankruptcy nearly a decade ago. Okawa says JAL expects to earn 50 percent of its revenue by the time the Olympics kick off. The airline currently makes only about 30 percent of its revenue from its international routes.

[Photo: Shutterstock]