Tuesday, March 8, 2011

Jetstar casts eye over Japan's domestic market





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THE Qantas budget offshoot Jetstar is believed to have shown interest in flying domestic routes in Japan after exploring opportunities for a joint venture with local investors.

Jetstar and its Singapore affiliate, Jetstar Asia, already cover international routes from Australia and Singapore to Japan.

But Japan's biggest newspaper, Yomiuri, has reported that Jetstar plans to raise funds from Japanese investors to form a joint venture to fly domestic routes.

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Under foreign investment rules outsiders cannot own more than one-third of a domestic airline in Japan.

Although Japan presents enormous opportunities, any plan to enter its domestic market would be fraught with difficulties because it is regarded as a relatively closed market.

Japan's two main carriers, Japan Airlines and All Nippon, are also considering low-cost subsidiaries.

The main low-cost competitor on domestic routes is Skymark Airlines.

''I would have a crack at south-east Asian markets before I'd have a crack at Japan - it's really tough,'' an industry insider said yesterday. ''China would be the hardest, followed by Japan.''

Yomiuri has reported that Jetstar and China's Spring Airlines had approached Japan's transport ministry to inform it of plans to seek approval to fly domestically.

'Inappropriate to comment on unsourced information''. But he highlighted that the airline had a ''pan-Asian strategy which included exploring opportunities across Asia''.

Jetstar has been talking up its intention to form other joint ventures in Asia in order to expand its footprint in the world's fastest growing aviation market.

The Philippines is also considered to be of interest to the airline.

Any joint venture in Japan is likely to be modelled on Jetstar Asia, the Singapore-based airline in which Qantas has a 49 per cent stake, with the Singaporean businessman Dennis Choo holding the remainder.

Qantas also part-owns a stake in Vietnam's second-largest airline, Jetstar Pacific.

The chief executive of Qantas, Alan Joyce, has highlighted his desire to form alliances with other Asian airlines, especially as its premium international operations face increased competition.

Macquarie Equities believes that Qantas will cement a closer relationship with Japan Airlines before turning its attention to courting another Asian partner.

Qantas has a code-share agreement with JAL between Australia and Japan.




By
Neha Jain



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