Japan Airlines joins Asia's crowded budget airline market

[SINGAPORE] Asia, where more than a dozen new low-fare carriers started in the past two decades, got a new entrant in Japan Airlines Co.

Japan's second-largest carrier is deepening its bet in the market for frills-free air travel by setting up a carrier in July for medium-to-long-haul international flights from Narita International Airport, which serves Tokyo. The yet-to-be named carrier will start operating two Boeing Co 787-8 aircraft, JAL said in a statement on its website Monday.

JAL - already a shareholder in low-fare carrier Jetstar Japan Co - is targeting a larger slice of the budget-air travel market, which has been slow to take off in Japan relative to other parts of Asia. As visitors to Japan surged, low-fare carriers such as AirAsia Bhd, Jetstar Japan and Peach Aviation Ltd began offering more services to compete against full-service operators JAL and ANA Holdings Inc as well as Shinkansen bullet trains.

Economic growth has spawned a new class of first-time fliers from Vietnam to the Philippines. Low-fare airlines have taken up more than half of the market share in South-east Asia, putting pressure on profitability for full-service carriers, the International Air Transport Association has said.

BLOOMBERG