Japan’s ANA will merge its Peach and Vanilla units to form the country’s biggest low-cost carrier.
ANA, Japan’s biggest airline by revenue, says it will merge its low-cost units Peach Aviation and Vanilla Air by March 2020, to improve the competitive edge of its budget flights.
Becoming Japan’s biggest budget carrier, the integrated low-cost business will be known as Peach. It has plans to enter the medium-haul international market by April 2020, the news agency Reuters reports.
Tokyo-based Vanilla and Osaka-based Peach compete against AirAsia Japan as well as Jetstar Japan, a joint venture between Australia’s Qantas and Japan Airlines (JAL).
“Competition is becoming increasingly fierce with the entry of overseas airlines and we thought now was the time to combine our strengths,” Vanilla President Katsuya Goto explained.
Further low-cost competition comes from other parts of Asia, such as Hong Kong Express and Singapore’s Scoot, which have been adding flights to Japan – an increasingly popular destination for Asian tourists.
Japan’s travel market has been dominated for years by the two major airlines ANA and JAL and a popular bullet train network, and the growth of budget airlines has not been as pronounced as in other parts of the world.
However, ANA aims to double its operating income from its low-cost business over the next five years, something that its rivals will have to address in order to continue to compete.