New Low-Cost Carrier for Japan – Air Rakuten?

AirAsia is set to start a joint venture with Rakuten (Japan’s most popular online retailer), and other firms, to once again try to tap into one of the world’s most robust travel markets.

AirAsia Japan is expecting to start operations in about a year, with plans for an initial capitalization of approximately ¥7 billion (US$69 million). The new venture’s fleet will start with five Airbus A320 aircraft, and fly both domestic and international routes.

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This is not AirAsia’s first rodeo in the Japan market. Last year, All Nippon Airways (ANA) ended a joint venture with the Malaysian-based low-cost carrier (LCC) only after a year together. This breakup came directly on the heels of hints made by AirAsia CEO Tony Fernandes that he may “pull out” of the venture.

It was clear from statements made by both parties that there were fundamental differences between them—one side blaming marketing deficiencies while the other citing cost management failures.

Interestingly, one of the disagreements the former venture had was where the airline would be based out of, and this seems to be an ongoing issue for the new venture as well. Obviously not a small concern, it should be interesting to see where they end up.

ANA has moved on as well, rebranding the LCC into Vanilla Air and basing itself out of Japan’s Narita International Airport (NRT).

All this is not to be confused with AirAsia’s long-haul associate AirAsia X, which already flies into Tokyo, Nagoya, Osaka, and other long- and medium-haul destinations around the region.

This time around the newly formed partnership will be relying solely on AirAsia’s industry experience. So even though Rakuten, Noevir (a cosmetics company), and Alpen (a sporting goods manufacturer) will be venturing into uncharted territory, they’ll have a pretty good navigator in AirAsia with them to lead the way.

Mr. Fernandes told reporters in Tokyo on Tuesday, “This is AirAsia part two and I hope there is no part three.”

H/T: Reuters