New Japan Airlines Co. group employees attend an initiation ceremony in a hangar at Haneda Airport in Tokyo, Japan. (Photographer: Tomohiro Ohsumi/Bloomberg)

Asia's Crowded Budget Airline Market Gets One More Entrant - JAL

(Bloomberg) -- Asia, where more than a dozen new low-fare carriers started in the past two decades, got a new entrant in Japan Airlines Co.

Japan’s second-largest carrier is deepening its bet in the market for frills-free air travel by setting up a carrier in July for medium-to-long-haul international flights from Narita International Airport, which serves Tokyo. The yet-to-be named carrier will start operating two Boeing Co. 787-8 aircraft, JAL said in a statement on its website Monday.

JAL -- already a shareholder in low-fare carrier Jetstar Japan Co. -- is targeting a larger slice of the budget-air travel market, which has been slow to take off in Japan relative to other parts of Asia. As visitors to Japan surged, low-fare carriers such as AirAsia Bhd., Jetstar Japan and Peach Aviation Ltd. began offering more services to compete against full-service operators JAL and ANA Holdings Inc. as well as Shinkansen bullet trains.

Economic growth has spawned a new class of first-time fliers from Vietnam to the Philippines. Low-fare airlines have taken up more than half of the market share in Southeast Asia, putting pressure on profitability for full-service carriers, the International Air Transport Association has said.

©2018 Bloomberg L.P.