By acquiring a stake in the Japanese unit of Malaysia-based AirAsia, Asia's largest low-cost carrier, Rakuten Inc. aims to expand its customer base of Rakuten Travel, its online travel site.
Rakuten's share in AirAsia's Japanese subsidiary is expected to stand at less than one-third of the budget carrier's capital base. Rakuten and AirAsia will announce their partnership Tuesday. Several other Japanese corporations will also invest in the company.
Japan Airlines (JAL) and All Nippon Airways (ANA) dominate the domestic low-cost carrier business with Jetstar Japan under JAL's wing, and Peach Aviation and Vanilla Air under ANA's. Rakuten's foray into the aviation industry is expected to ramp up competition among the industry.
On the other hand, Rakuten can expect to develop new travel merchandise by incorporating Asian networks in addition to domestic networks operated by AirAsia.
The airline plans to expand domestic routes from its Chubu Airport hub in Aichi Prefecture to Sapporo, Fukuoka and Narita, with aims to eventually operate flights to South Korea, Taiwan and other Asian destinations.
Since AirAsia will be the only budget carrier to have its hub at Chubu Airport, Rakuten will gain a foothold to expand its business — especially in the Nagoya area. AirAsia can also improve the strength of its sales by utilizing the Internet retailer's sales network through Rakuten Travel.
AirAsia established AirAsia Japan in 2011 with ANA Holdings Inc., with which ANA is affiliated. AirAsia Japan began operations in August 2012 as the nation's third largest low-cost carrier and operated a total of nine routes, five domestic and four international.
However, AirAsia decided to dissolve its partnership with ANA on June 13 and withdrew from the Japanese market. The joint venture was suffering a downturn with a consistently low passenger load factor of under 50 percent.
A number of reasons were cited for the failure, including the carrier's ticketing system which sold tickets online to individual customers. The setup did not suit the Japanese market, where tickets are often sold through travel agencies for group tours.
But thanks to the emergence of low-cost carriers, a new demand for aviation has been created leading to more frequent flyers. It seems AirAsia could not give up its ambition to tap the Japan market.
A series of troubles have beset budget airlines in this country.
Peach Aviation, Jetstar Japan and Vanilla Air have been forced to cancel flights due to a shortage of pilots because of sick leave and a wave of resignations since April. Spring Airlines Japan, an affiliate of China's Spring Airlines, has twice postponed the start of operations originally scheduled for the end of May.
Price competition triggered by the arrival of low-cost carriers injected new life into the domestic aviation market, but problems mounted as they attempted to operate without sufficient personnel or planes. These issues need to be handled by AirAsia, should it wish to succeed in penetrating the Japanese market.
The Washington Post
Mon Jun 30 2014
Rakuten and AirAsia will announce their partnership Tuesday.
Who is Prabowo Subianto, incoming president of Indonesia?
A wealthy ex-general with ties to Indonesia's popular outgoing president and its dictatorial past, looks set to be its next leader.
Iran's supreme leader says Hamas leader's death will not halt 'Axis of Resistance'
The "Axis of Resistance", built up with years of Iranian support, includes Hamas, the Lebanese Hezbollah group, the Houthi movement in Yemen, and various Shi'ite groups in Iraq and Syria.
Putin says Russia willing to seek compromises between Iran and Israel
Russia is ready to help seek compromises between arch-foes Israel and Iran, President Vladimir Putin said on Friday, saying these would be difficult but possible.
What proposals will Russia push at the BRICS summit?
The proposal is also to establish a BRICS reinsurance company to allow uninterrupted shipment of goods and key commodities between members.
Indonesia's free meals plan in the spotlight as Prabowo readies for office
Prabowo calls the programme one of the main drivers of economic growth, eventually set to add an estimated 2.5 million jobs.
Astro AWANI's revamped English news website, AWANI International, launches on Oct 21
Astro AWANI's revamped English platform delivers in-depth global news and expert analysis to keep you informed on key developments.
Israeli strikes kill 33 people in Jabalia refugee camp in Gaza, medics say
Residents of Jabalia said Israeli tanks had reached the heart of the camp after pushing through suburbs and residential districts.
Liam Payne's ex-partner calls for media restraint after 'painful' death
Cheryl Tweedy used her statement to urge the media to remember they had a seven-year-old son, Bear, who could read the reports.
Analysts: Indonesia's strong MoF leadership team to boost investor confidence
Sri Mulyani Indrawati as head of Indonesia's Ministry of Finance is expected to instil confidence among investors.
Biden offers both a carrot and a stick to Israel as his term nears an end
Israel has frequently resisted US advice and has caused political difficulties for the Biden administration.
Putin says BRICS will generate most of global economic growth
Russian President Vladimir Putin will host a summit of the group in the city of Kazan on Oct. 22-24.
ISIS Malaysia's perspective of Budget 2025
An excellent rakyat-centric budget under the overarching principle of a caring and humane economy.
Budget 2025: Record increase in STR, SARA aid initiatives
The government will provide a significant boost to the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) initiatives next year.
Budget 2025: EPF contributions to be made mandatory for foreign workers – PM Anwar
The government plans to make it compulsory for all non-citizen workers to contribute to the Employees Provident Fund (EPF).
What policies to expect from Indonesia's new President Prabowo
Prabowo will be open to foreign investment, his aide has said, such as by offering investors management of airports and sea ports.
Budget 2025: Govt allocates RM470 mil to empower women's participation in PMKS
The Women's Leadership Apprenticeship Program will be intensified as an effort to produce more female corporate personalities.
Israel sends more troops into north Gaza, deepens raid
Residents of Jabalia in northern Gaza said Israeli tanks had reached the heart of the camp, using heavy air and ground fire.
Indonesia ramps up security ahead of Prabowo's inauguration
Prabowo Subianto will be sworn in as Indonesia's president on Sunday with Vice President-elect, Gibran Rakabuming Raka, also taking office.
Immediate allocation of RM150 mil for local authorities, DID to tackle flash floods
Datuk Seri Anwar Ibrahim said this allocation is intended to address the recent flash floods that hit the capital and several major towns.
Budget 2025: Sabah, Sarawak to continue receiving among highest allocations - PM
Sabah and Sarawak continues to be prioritised under Budget 2025, with allocations of RM6.7 billion and RM5.9 billion respectively.