Japanese corporates to have new low-cost premium cabin option from 2020

Japanese corporate customers will have a new option for Bangkok and Seoul in 2020 as Japan Airlines (JAL) launches its new widebody LCC, Zipair Tokyo. JAL earlier this month confirmed Zipair Tokyo as the name for its new medium/long haul LCC and announced Bangkok and Seoul as the first destinations. Flights will begin in the summer 2020 schedule using Boeing 787-8s.


Highlights:

  • Japan Airlines plans to launch new medium/long haul LCC Zipair Tokyo in 2020;
  • Zipair has selected Tokyo Narita-Bangkok Suvarnabhumi and Tokyo Narita-Seoul Incheon as its first routes;
  • While Zipair is aimed mainly at the leisure segment it should attract some corporate traffic, particularly on routes such as Narita-Incheon that parent JAL no longer operates.

Zipair will not decide on its product until later but a two-class configuration is planned. Having a business or premium economy product at the front should help enable Zipair to attract corporate customers – both on its initial routes and on new long-haul routes. The airline plans to begin long-haul services in 2021 as it adds two more 787s. It is targeting the Japan-mainland US and Japan-Europe markets.

On the Tokyo Narita-Seoul Incheon route Zipair enables JAL to reestablish a presence. JAL suspended services on the Narita-Incheon route in Mar-2018. Rival All Nippon Airways (ANA) now uses its budget subsidiary Peach to compete on this route.

JAL and ANA both serve the Tokyo-Seoul market with three daily flights from Haneda to Gimpo, a route with a high portion of business traffic. While Narita and Incheon are generally seen as less convenient given they are further from Tokyo and Seoul, offering an option from Narita to Incheon provides corporate customers with another alternative. This is particularly important for businesses with offices in the Narita area (rather than downtown Tokyo) or for passengers connecting in Narita to other flights.

As Incheon is Narita’s largest route (based on current seat capacity), JAL strategically needs to have a presence. In addition to Peach, five South Korean LCCs operate in this market (Air Seoul, Eastar Jet, Jeju air, Jin Air and T’way) as well as two Korean FSCs (Asiana and Korean Air). Zipair will therefore become only the second Japanese competitor in this key market.

Bangkok is Narita’ largest destination based on seat capacity (when including both Bangkok airports). The Narita-Bangkok route is already served by JAL but having an LCC brand should be complementary. Zipair’s strategy is to operate a mix of routes that JAL also serves along with routes that JAL does not serve. For the former, Zipair and JAL will generally pursue different segments of the market but that does not mean corporates cannot use Zipair, particularly its premium product.

The newlow cost long haul operator will be the fifth LCC in the Narita-Bangkok market, joining NokScoot, Scoot, Thai AirAsia X and Thai Lion. All four of these LCCs operate two-class widebody aircraft on this route, offering a premium product. However, the four existing competitors operate from Don Mueang airport in Bangkok while Zipair will operate from Suvarnabhumi International.

CHART – Seoul Incheon (ICN) is Narita’s largest route; Bangkok Don Mueang (DMK) is seventh largest and Bangkok Suvarnabhumi (BKK) is ninth largest but combined the two Bangkok airports are larger than IncheonSource: CAPA – Centre for Aviation & OAG (data: w/c 18-Mar-2019)

ANA, JAL and Thai Airways now serve the Narita-Suvarnabhumi route. All three FSCs also link Haneda with Suvarnabhumi.  FSCs still account for slightly over 60% of seat capacity in the Tokyo-Bangkok market (all airports) and slightly over 70% of seat capacity in the Tokyo-Seoul markets (all airports). However, the LCC share has been growing steadily in recent years. In fact, at the beginning of this decade it was zero in both markets.

The North Asia market has changed drastically over the last decade as LCCs have expanded rapidly. North Asian corporates are gradually starting to embrace LCCs for travel within Asia and beyond. As more LCCs such as Zipair launch widebody operations with premium cabins this trend will surely continue.

LEARN MORE… about Zipair’s strategy, including fleet and network plans in this exclusive CAPA TV video interview with T.B.L. project director Hiroyuki Uehara filmed on the sidelines of the CAPA Global LCC Summit in Singapore in Feb-2019.