TOKYO/KUALA LUMPUR: Japan's All Nippon Airways and Malaysia's AirAsia said on Thursday they will launch a new low-cost airline in Japan as the two carriers aim to win more business in Asia's growing budget travel market.
Strong economic growth, a rising middle class and the lack of reliable land and sea transport infrastructure have been fuelling the growth of budget airlines in Asia, which recently overtook North America as the world's biggest passenger air travel market.
The new carrier, AirAsia Japan, will be based at Narita international airport near Tokyo and capitalised at 5 billion yen ($63.4 million). ANA, Japan's biggest airline in terms of passenger traffic, will hold 67 percent and AirAsia will hold the remaining 33 percent.
The carrier plans to start domestic and international flights in August 2012.
"The presence of AirAsia Japan is to serve the highly lucrative travel market in Japan. Air travel is deeply entrenched in the social and business life of the Japanese even under a high cost environment," AirAsia said in a statement.
ANA is scheduled to hold a news conference at 4 p.m. (0700 GMT) to provide additional details. ANA President Shinichiro Ito will attend.
Japan has long been considered a difficult market for budget carriers due to high labour costs and landing fees, as well as limited availability of airport slots.
But ANA earlier this year set up Japan's first budget carrier, Peach Aviation, with Hong Kong investor First Eastern Investment Group.
Peach has said it plans to start flights in March 2012 from Kansai International Airport in western Japan to destinations within three to four hours' flying time.
AirAsia in June sealed a record-breaking $18 billion order for 200 aircraft from Airbus Industries.
Competition among Asian budget carriers is heating up with Singapore Airlines, the world's second largest by market value, planning to set up a long-haul budget carrier by the middle of next year.
ANA competes with domestic rival Japan Airlines, which the Nikkei business daily said has signed a 10 billion to 20 billion yen joint venture agreement with Australia's Jetstar, a unit of Qantas Airways , to create a new discount airline.
ANA shares advanced 0.4 percent to close at 271 yen, while the broader Nikkei 225 Average ended flat.
Copyright Reuters, 2011
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