ANA setting up low-cost carrier, a first for Japanese airline, amid growing global competition

ANA setting up low-cost carrier, a Japan first

TOKYO — Japanese carrier All Nippon Airways said Thursday it’s setting up Japan’s first low-cost carrier, potentially making flights between Osaka and Tokyo cheaper than riding the popular bullet train.

The new company is being set up in the second half of 2010, with Hong Kong-based First Eastern Investment Group. Domestic and international flights will start in the second half of next year out of Kansai International Airport in Osaka, ANA said without giving details of routes or ticket prices.

Japanese media reports said Tokyo to Osaka one-way may become as cheap as 5,000 yen ($60) compared with the bullet train at 14,000 yen ($170). A trip to Okinawa could go down to 8,000 yen ($95). A plane fare from Osaka to Naha, Okinawa, now costs about 34,000 yen ($400).

Low-cost carriers are still a novelty in Japan because of tight government policies on air travel, but they are gradually easing up. Japanese are starting to gravitate to foreign low-cost carriers, which offer bargains while giving up on amenities and charging for food.

“We anticipate an increase in passenger traffic demand in East Asia, and came to the conclusion that a low-cost carrier would be the right approach to compete effectively in this market,” said Shinichiro Ito, ANA president and chief executive.

The new company, which will be run independently of ANA, will be 66.7 percent owned by Japanese investors, including ANA’s 39 percent stake. First Eastern will own 33.3 percent.