Japan Air Sets Sights on AirAsia's Turf for First Low-Cost Route

(Bloomberg) -- Japan Airlines Co. has decided to go head-first into the home turf of Asia’s largest low-fare carrier.

The Japanese operator, which is starting its own budget carrier next month, will begin flying to Southeast Asia initially, Masaru Onishi, a director at Japan Airlines, said in an interview in Sydney Monday. The new company will be able to lower per-seat costs by 50 percent compared with the parent airline, he said, without providing more details including the first destination.

Japan Airlines will compete with Sepang, Malaysia-based AirAsia Group Bhd., whose businesses include affiliates in Indonesia, the Philippines, Thailand and Vietnam. The Japanese carrier, which has said it plans to fly medium-to-long-haul international routes from the Narita International Airport serving Tokyo, is also assessing when it can begin services to Europe and the U.S., Onishi said.

The new budget airline will add two 787s every year, Onishi said. Japan Airlines is in talks with Boeing Co. about possibly converting some of its existing 787s for the low-cost unit or ordering new planes. It expects to make a decision in about a year.

AirAsia Group also has a long-haul arm, AirAsia X Bhd., whose more than 20 destinations include Auckland, Tokyo, Sapporo, Chengdu, Shanghai, Melbourne, the Gold Coast and Honolulu.

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