Treading on new turf
ANA feels the heat as chinese airlines expand further in Japan
Shandong Airlines is expected to open a route on Thursday from Kunming, Southwest China’s Yunnan Province, to Osaka, with a stopover in Jinan, East China’s Shandong Province, in the latest example of a Chinese airline expanding its presence in Japan.
The sky is getting crowded as airlines from each country jockey for a bigger share of the market.
Japan’s largest airline, All Nippon Airways ( ANA) Co, is feeling the heat. “We are under pressure,” said Shinichi Abe, senior vice president of ANA, in a group interview in Beijing on Tuesday.
There were 43 routes between the Chinese mainland and Japan during the winter season of 2014- 15, with mainland airlines operating 41 of those routes, Abe said. During the summer season of 2015, there were 219 flights per week, but 201 were operated by mainland carriers.
The summer season runs from the last Sunday in March to the last Saturday in October, and the winter season runs from the last Sunday in October to the last Saturday in March the following year.
“The pressure is coming not just from foreign carriers, but budget airlines as well,” Abe said.
Crowded skies
Abe’s remarks came after a Nikkei report that said ANA Holdings is expected to report that its operating profifit for the April- June quarter fell by 20 percent year- on- year to about 13 billion yen ($ 126 million) as more Chinese airlines encroach on ANA’s turf with new routes.
Along with Shandong Airlines’ new route, Hong Kong Airlines recently announced that it will increase the frequency of flights on its route from Hong Kong to Osaka to twice a day starting September 15. It will also change its route from Hong Kong to Sapporo into a daily route to accommodate the growing demand.
In July, Shanghai- based China Eastern Airlines celebrated the 20th anniversary of its route from Shanghai to Hiroshima.
Since it opened the route, China Eastern has gradually increased the frequency of flights from twice a week in 1996 to the current seven times each week. In 2011, the airline extended its route to Chengdu, Southwest China’s Sichuan Province.
China Eastern flies to 17 destinations in Japan, and it is the largest airline operating flights between the two countries.
In March, China’s budget carrier Spring Airlines opened a route from Fuzhou, East China’s Fujian Province, to Osaka. With the help of its Japanese unit, which launched its fifth route from Tokyo Narita since opening for business in February, Spring Airlines aims to have 37 routes between China and Japan by the end of 2016. Spring’s routes between China and Japan account for 13 percent of its total capacity, said Mao Yi from the airline’s publicity department. The market, however, is growing more and more competitive as more airlines open routes there. The strengthening yen has also put pressure on the airlines.
Still, Spring sees Japan as a key component of its growth strategy and believes the Olympic Games in Japan in 2020 will provide it with additional opportunities, Mao told the Global Times.
Still confident
Although there are plenty of uncertainties in the Chinese market, Japan remains a popular designation for Chinese travelers.
In 2015, the number of people visiting Japan from China more than doubled to 5 million, data from Japan’s national tourism agency showed.
The trend looks set to continue, with more 1.73 million people from China visiting Japan over the first four months of 2016, in spite of a strengthening yen. A stronger yen results in higher fees, which in turn dents demand, Abe said.
And although ANA is still not a quite well- known brand among ordinary Chinese travelers, Abe remains confident in the Chinese market.
From April 2015 to March 2016, the number of passengers flying ANA worldwide grew by 110 percent to 2.2 million. In terms of the Chinese mainland market, more than 1.05 million mutual visits by ANA passengers were exchanged between the two countries during the period, a growth rate of 30 percent.
ANA’s route from Narita Airport to Shanghai Pudong International Airport has been profitable, Abe said. Business class has been more profitable than economy on routes from Beijing and Shanghai to Haneda International Airport. ANA’s route to Chengdu has turned out to be popular.
As the Japanese airline with the largest network, ANA started a daily route from Wuhan, Central China’s Hubei Province, to Tokyo in April, increasing its number of destinations on the mainland to 10.
Other destinations include Beijing, Shanghai, Guangzhou and Dalian. Chinese destinations make up onethird of ANA’s total number of flights.
“We now have services in the costal and central cities, and we hope to have markets in the inner land,” Abe said, “I personally hope to have routes to Chongqing, Xi’an and Harbin, but they are still just an idea.”
Abe said ANA also hopes to make its flights out of China more convenient, such as increasing the number of flights that depart in the morning. “Services come first, and we will reference the price of non- budget airlines from China, but we will not try to compete on price [ with budget airlines],” Abe said.