Japanese airline, ANA, and Malaysia-based low cost carrier AirAsia have agreed to dissolve AirAsia Japan, the LCC joint venture started in August 2011.

 

ANA is acquiring all the shares of AirAsia Japan and will make it a wholly-owned subsidiary. The LCC will continue to operate under the AirAsia brand until 31 October and ANA says it will run the business based out of Narita Airport.

 

According to AirAsia the project “faced many challenges since its launch… issues stemmed from a fundamental difference of opinion between its shareholders on how the business should be managed from cost management to where the domestic business operations should be based”.

 

The Malaysian carrier says ANA is paying JPY2,450m ($25.9m) for AirAsia’s shareholding and that it will get its aircraft leased to AirAsia Japan back by 1 November.

 

AirAsia Group CEO Tony Fernandes says: “I have great respect for ANA as the leading legacy airline in Japan but it is time for us to part ways. I remain positive on the Japanese market and believe there is tremendous opportunity for a low-cost carrier to succeed. We have not given up on the dream of changing air travel in Japan and look forward to returning to the market.”

 

LCCs, as a market segment, have eluded Japan up to now. They were considered a way of boosting domestic travel in a large country with a population of 128m but they still have a very limited presence compared to other developed aviation markets. IATA recently noted a February contraction in Japan’s domestic market of -3.1% compared to February 2012 owing, it says, to the flat-lining economy and related weak domestic demand for air travel. Japan’s domestic traffic is -12% below pre-Tsunami levels.