KUALA LUMPUR, Malaysia – Southeast Asia’s top budget carrier, AirAsia, said Tuesday it has decided to part ways with Japan’s All Nippon Airways Co. after clashes over how to run their low-cost joint venture airline.
AirAsia said it will sell its 49 per cent stake to ANA for 2.45 billion yen ($25 million). AirAsia Japan will operate until the end of October, after which it will be given a new name and operate as ANA’s fully-owned subsidiary out of Tokyo’s Narita airport.
AirAsia said the two-year joint venture was hampered by a “fundamental difference of opinion” on issues such as cost management and where the domestic business operations should be based.
“I have great respect for ANA as the leading legacy airline in Japan but it is time for us to part ways and focus our attention on what we do best, which is running a true low-cost carrier,” AirAsia Chief Executive Tony Fernandes said in a statement.
ANA Senior Vice-President Shinzo Shimizu told a press conference in Tokyo that the joint venture was not meeting expectations, both in revenue and brand recognition in Japan. AirAsia Japan lost 3.5 billion yen (about $35 million) in the fiscal year through March 2013, he said.
“We have learned a lot from our experience working with AirAsia,” said Shimizu. “We hope to utilize that knowledge to create a new low-cost carrier tailored to Japan.”
Shimizu said his company will announce a new plan in July for a domestic low-cost carrier to take AirAsia Japan’s place.
The move will cost AirAsia a key hub in East Asia but its long-haul arm, AirAsia X, still flies from Kuala Lumpur to Tokyo and Osaka.
Fernandes said he remained positive about the chances for success of a low-cost airline in Japan.
“We have not given up on the dream of changing air travel in Japan and look forward to returning to the market,” he said.
AirAsia Japan flies to five destinations in Japan, as well as to Seoul and Pusan in South Korea out of Narita airport, one of the busiest airports in Japan. But Narita’s restricted hours, congestion and high landing fees are a headache for budget carriers operating there.
ANA also has a 38.7 per cent stake in Peach Aviation, a low-cost joint venture with Hong Kong investment group, First Eastern Aviation Holdings. Peach was launched last year, offering flights out of Kansai International Airport in Osaka, central Japan.
Associated Press Writer Azusa Uchikura in Tokyo contributed to this report.