Posts Tagged ‘low cost carriers’


[The Economist] THE world’s busiest train route, and one of the busiest air routes, is between Tokyo and Osaka, Japan’s two biggest metropolitan areas. On that corridor, the shinkansen, as Japan’s bullet trains are known, were born in 1964. They whizz 120,000 passengers a day smoothly from one place to another, on trains that leave every ten minutes.

Bullet Trains whizz 120,000 passengers a day smoothly from one place to another, on trains that leave every ten minutes

Bullet Trains whizz 120,000 passengers a day smoothly from one place to another, on trains that leave every ten minutes

Although humans, not robots, are at the controls, the average delay is a miraculous 36 seconds. To take all those passengers by air would require 667 aircraft, each with 180 seats, or five times Japan’s fleet of Boeing 737s, estimates Macquarie, an investment bank.

Undeterred, between March and August three low-cost airlines will have started operations in Japan. It would be a miracle if they could help hammer down train and plane fares in Japan, which are excruciating. For example, a one-way shinkansen ticket from Tokyo to Osaka costs ¥14,000 ($170), and there are no discounts for return fares or for booking early. But compared with Europe and other parts of Asia, where budget airlines have quickly gained market share, in Japan the low-cost model is expected to take time to take off.

There are three main reasons for that, analysts say. First, all three newcomers have established parents. Peach, which started flying in March, and Air Asia Japan, which starts in August, are part-owned by ANA, one of Japan’s two main carriers. Jetstar Japan, which launches operations in July, is one-third owned by Japan Airlines (JAL). Such ties have usually hobbled low-cost airlines elsewhere: incumbents hate to cannibalise their…..

Read the full story at The Economist….


Apr 28th 2012 | TOKYO | from the print edition


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[Bild/Reuters]  (Reuters) – Deutsche Lufthansa said it was still evaluating how many jobs it would cut in a cost-reduction programme after a newspaper reported Germany’s biggest airline planned to slash about 3,000 administrative staff.

Bild earlier reported that Lufthansa planned to cut half of a total of 6,000 administrative jobs around the world

Bild earlier reported that Lufthansa planned to cut half of a total of 6,000 administrative jobs around the world

German mass-circulation paper Bild earlier reported that Lufthansa planned to cut half of a total of 6,000 administrative jobs around the world, with 1,500 jobs to go in Frankfurt.

The remaining administrative jobs are to be moved to a new business unit, with longer working hours and less pay, the paper said, citing an internal document.

“We always said that we do not explicitly rule out job cuts,” a spokesman for Lufthansa said.

Lufthansa has a total of about 116,000 employees around the world, more than half of which are based in Germany.

The report comes a day after Lufthansa unexpectedly announced its Chief Financial Officer Stephan Gemkow was quitting after 22 years of service at the airline and six years as CFO.

Lufthansa fared better in the global economic crisis than peers such as Air France-KLM and British Airways, but Chief Executive Christoph Franz, who took the job at the start of last year, has said the airline needs to radically cut costs to remain competitive.

It aims to improve results by 1.5 billion euros ($1.98 billion) by the end of 2014 to cope with high fuel prices, fierce competition from low-cost carriers and Middle East airlines and a weak European economy.

Silvia Quandt analyst Stefan Kick said the gloomy economic outlook would likely help Lufthansa push its point in negotiations with trade unions representing its workers.

The carrier said last week it could not rule out compulsory redundancies at its German passenger airline, which is to account for almost two thirds of cost cuts.

Services union Verdi said it had no…..

Read the remainder of the Bild story here at Reuters….


FRANKFURT | Thu Apr 26, 2012
Reporting by Peter Maushagen;
Writing by Maria Sheahan.
Editing by Jane Merriman and Victoria Bryan



[] Low-cost carriers were behind nearly all of the growth in the Philippine air travel sector over the last five years, Gokongwei-led Cebu Pacific said on Thursday.

Growth is being driven by low fares offered by low-cost carriers such as Cebu Pacific

Growth is being driven by low fares offered by low-cost carriers such as Cebu Pacific

At the Brunei Darussalam-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA) Summit held in Davao last week, Cebu Pacific vice president for marketing and distribution Candice Iyog said 96 percent of the industry’s growth could be traced to the expansion of low-cost carriers.

Full-service carriers like Philippine Airlines, meanwhile, contributed just 4 percent to the sector’s growth.

“This is mainly driven by the low fares offered by low-cost carriers’s such as Cebu Pacific. By unbundling services such as baggage and meals, customers are given the choice to buy only the services they want to pay for,” Iyog said.

“Full-service or legacy carriers continue to bundle all their services into the fare, something new air travelers have rejected. Cebu Pacific continues to remain focused on stimulating travel demand in the Philippines. We’ve seen this in every market we operate,” she said.

Despite rising fuel costs, Iyog claimed that airline tickets are now 30 percent cheaper, on average, than they were 10 years ago.

Citing government data, she said one out of every two domestic passengers flew on budget airlines’s in 2006. In 2011, budget airlines’s dominated the domestic market with 76-percent market share, or three out of every four domestic passengers.

She said the effect of budget airlines’s on……

Read the full story Philippine Daily Inquirer…..



Paolo G. Montecillo



Low-cost carriers will likely occupy a prominent place in Japan’s aviation industry from now on as major airlines enter the LCC market.

There are nearly 100 airports in Japan, but many of them are suffering from a low utilization rates

There are nearly 100 airports in Japan, but many of them are suffering from a low utilization rates

Peach Aviation, in which All Nippon Airways has invested, started domestic flights in March and will begin international flights in May to and from Kansai airport. Jetstar Japan, which is affiliated with Japan Airlines, will launch domestic flights in July and international flights next year using Narita airport as its base. AirAsia Japan, linked to ANA, will start domestic flights in August and international flights in October, and will also be based in Narita.

There are nearly 100 airports in Japan, but many of them are suffering from a low utilization rates. The government hopes to introduce the private sector’s capital and management knowhow to revitalize these airports. It also should consider inviting LCCs to utilize these airports. Local governments and businesses near airports should make greater efforts to attract tourists.

To make their air fares cheaper — about half that of major airlines — LCCs feature more seats on their planes than full-service airlines and have minimalist in-flight services. LCC users should be aware of the chance of possible instability in LCC flight operations due to their use of a relatively small number of airliners. For their part, LCCs must do their utmost to ensure flight safety.

In Europe and North America, LCCs enjoy a market share of about 30 percent. They attract young people who can’t afford high ticket prices as well as members of the rising middle class from the emerging Asian economies.

Read this full editoial from The Japan Times Online….


Wednesday April 18th, 2012
Japan Times Editorial