Spring Airlines eyes Japan

Spring Airlines, China's leading budget carrier by revenue, is expected to operate domestic routes in Japan next May, which are expected to connect with the carrier's existing flights between China and Japan, the company's spokesman Zhang Wu'an told the Global Times Tuesday.

According to the company, Japan's Ministry of Land, Infrastructure, Transport and Tourism has accepted the application from Spring Airlines Japan, a joint venture between Spring Airlines and Japanese investors, to operate domestic routes within Japan. The three routes will fly between Tokyo's Narita Airport and three cities - Saga, Takamatsu and Hiroshima.

The proposed domestic routes in Japan will link to the carrier's Sino-Japan routes, and the company has good cooperation with Chinese travel agencies which can provide a large number of passengers, Zhang said, responding to doubts that these cities are not well-known enough as tourist destinations to attract many passengers.

The Shanghai-based air carrier currently operates routes between Shanghai and Saga, Takamatsu and Ibaraki.

However, due to limited market capacity and competition from Japan's Shinkansen high-speed rail, the rate of return on investments in Japan's domestic routes is not high, said Li Lei, an aviation analyst with Beijing-based Minzu Securities.

Japan has a mature market for budget airlines, which means intense competition, and Spring Airlines is at a disadvantaged position due to the language barrier, Zou Jianjun, a professor with the Civil Aviation Management Institute of China, told the Global Times Tuesday.

Japan's first budget carrier Peach, a joint venture between Japanese airline All Nippon Airways (ANA) and Hong Kong airline First Eastern Investment Group, began operation in Japan in March this year, followed by Jetstar Japan, a joint venture formed in July 2012 by Australian carrier Qantas Group, Japan Airlines Co and Mitsubishi Corp.

Vanilla Air, a budget carrier controlled by ANA, plans to start domestic flights in December.

Spring Airlines will gain a competitive advantage in Japan's local budget market if it can offer low costs and seamless connections between its international routes and routes in Japan to travelers from China, Zou said.

Li from Minzu Securities said that operating routes in Japan will help Spring Airlines expand its Sino-Japan business which has relatively high profitability.

Spring Airlines and Spring Airlines Japan will both increase air routes between China and Japan, Zhang said, although the passenger load on these routes has fallen to 50-60 percent from a peak of 80-90 percent due to a territorial dispute between the two countries one year ago.