ANA will buy AirAsia out of a Japanese budget airline joint venture for JPY¥2.45 billion (USD$25.11 million), the Malaysian low-cost carrier said, dissolving a loss-making alliance after less than two years.
The venture, based at Tokyo’s Narita airport, has failed to win over Japanese passengers since it was set up in August 2011. ANA, which owns 67 percent of the venture, has blamed the poor performance of AirAsia Japan on ineffective marketing and a non user friendly booking website.
Differences in opinion on issues ranging from cost management to where the business should be based contributed to the breakup, AirAsia said in a statement on Tuesday.
The split comes at a time when AirAsia is planning to expand overseas. The pullout from the venture, however, is consistent with AirAsia’s past decisions to drop loss-making routes.
“I remain positive on the Japanese market and believe there is tremendous opportunity for a low-cost carrier to succeed,” AirAsia Group chief executive Tony Fernandes said in the statement.
“We have not given up on the dream of changing air travel in Japan and look forward to returning to the market,” he added.
AirAsia Japan has been reporting losses since it began operations with flights to five local destinations and two in South Korea.
The venture cut ANA’s operating profit by about JPY¥3.5 billion in the year ended March, ANA’s senior vice president Shinzo Shimizu said on Tuesday.
“We judged it would be better to operate the carrier as a wholly owned unit,” Shimizu said at a press conference in Tokyo.
ANA has another budget joint venture Peach based at Osaka’s Kansai airport.
Local rival Japan Airlines operates Jetstar Japan, a joint venture with Qantas Airways that has bases in both Narita and Kansai.
Shimizu said ANA will decide in July how to operate the former AirAsia venture and will choose a name for the unit.
A possible merger with Peach was one option being considered, he added.
The unit will use the AirAsia livery until November.