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AirAsia To Start Tokyo-Kuala Lumpur Budget Flights From December

>> Wednesday, September 22, 2010

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TOKYO (Dow Jones)--Malayian discount airline AirAsia Bhd. (5099.KU) will become the first foreign budget carrier to use Tokyo's downtown Haneda ariport, offering discount flights to Kuala Lumpur from December, the chief executive of the airline's long-haul arm said Friday.

AirAsia X will offer three low-price flights to Kuala Lumpur each week with one-way fares intially starting as low as $58, Chief Executive Azran Osman-Rani said at a news conference in Tokyo.


The new service will make AirAsia X--the airline's long-haul arm--the latest carrier to enter Japan's discount airline market, where competition is increasing rapidly as more players seek to capitalize on what is seen as a largely untapped market.

The growth in low-cost flight services also comes at a crucial time for Japan's airline industry. Former national flagship carrier Japan Airlines Corp. filed for bankruptcy protection in January. Meanwhile, the government aims to open more slots at Tokyo's two main airports--Haneda and Narita.

AirAsia hopes to expand its flight network in Japan in the future, Osman-Rani said, adding that Fukuoka, Osaka and Sapporo, are cities AirAsia has a "a strong interest" in serving.

To promote the new route, AirAsia X will offer a special Y5,000 or $58 fare for a one-way trip between Tokyo and Kuala Lumpur for passengers who book online between Sept. 23 and Oct. 31.

After the expiry of this offer, prices will range from Y10,000 and Y25,000 for a one-way economy-class trip, Osman-Rani said. That compares with standard round-trip fares of around Y250,000-Y350,000 offered by conventional airlines.

All Nippon Airways Co. (9202.TO), Japan's second-biggest carrier by revenue, said earlier this month it will launch a low-cost carrier next year with other partners. JAL has also said it is considering establishing a budget airline.

Earlier this year, Spring Airlines of China and Air Busan, a unit of South Korea's Asiana Airlines Inc. (020560.SE), started low-cost flight services in Japan. These followed Jetstar Airways, a unit of Qantas Airways Ltd., which has offered flights between major Australian cities and and Kansai International Airport in western Japan since 2007.

Low-cost carriers usually reduce costs by maximizing fight frequency per aircraft and by using low-fee airports, while selling tickets exclusively online.

Air Asia X is 70%-owned by AirAsia and a Malaysian fund established by AirAsia CEO Tony Fernandes and others. It already offers long-haul budget fights between Kuala Lumpur and London.

Source: By Yoshio Takahashi, Dow Jones Newswires

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