Low-cost start-up carriers appear to be having more of an impact on Japan's "big three" than expected and new rules are on the way that could erode their dominance on busy domestic routes.
The "big three" - All Nippon Airways, Japan Airlines and Japan Air System - are concerned that Japan's transport ministry is preparing sweeping changes to the way in which it awards slots at congested domestic airports.
From next year, when a third runway opens at Tokyo's Haneda Airport, slots will be awarded via a "scoring system", under which airlines will be rated by their punctuality, fare levels and passenger load factors.
Slot possession will be reviewed at other busy domestic airports, such as Fukuoka, Osaka and Sapporo. Slots could be stripped from established carriers and awarded to new ones.
Under the existing slot-allocation system, airlines can only win take-off and landing positions when new runways are opened at busy airports, or when additional slots become available through increases in hourly movements.
This has restricted the growth plans of start-ups Air Do and Skymark Airlines, both of which began operating last year - Air Do with Tokyo-Sapporo services and Skymark flying between Tokyo and Fukuoka. Each provides just three daily round-trips, as they were only awarded a handful of slots at Tokyo Haneda when a new runway opened in 1997.
Although the majors say they are open to competition, the lower-fare start-ups claim average load factors of around 80%, compared with 50% or below for the incumbents on the routes where they compete. The co-operation and expansion of the two new entrants is a further cause for concern.
Air Do's board has voted in favour of a 40%, ´1.5 billion ($13 million), capital boost, lifting its capitalisation to ´5.07 billion. Japanese electronics company Kyocera is to purchase ´500 million worth of new shares, raising its stake to more than 10% and making it the single largest shareholder.
The remaining ´1 billion will come from other shareholders, including new ones. Skymark, meanwhile, has applied for transport ministry approval to launch Osaka-Fukuoka and Sapporo services in April.
Air Do and Skymark have also quietly formed a business tie-up. They have agreed to share radio communications equipment and are looking at sharing offices and ticket counters at airports.
Talks are also planned with Pan Asia Airways - a third start-up that aims to launch Fukuoka-Naha services next year.
Daily frequencies in February and March (round trips)| Tokyo-Sapporo | Tokyo-Fukuoka | |
| ANA | 14 | 12 |
| JAL | 13* | 12 |
| JAS | 11 | 10 |
| Air Do | 3 | - |
| Skymark | - | 3 |
*JAL has 12 frequencies on Tokyo-Sapporo in March
Source: Airline Business
