The Orange Cancer Spreads
Jetstar eyes Japanese domestic market
Qantas's budget offshoot, Jetstar, is reportedly planning to enter the challenging domestic market in Japan by forming a joint venture with local investors.
Jetstar and its Singapore-based joint venture, Jetstar Asia, already fly international routes from Australia and Singapore to Japan. But the Yomiuri newspaper has reported that Jetstar plans to raise funds from Japanese investors to form a joint venture to fly domestic routes. Under foreign investment rules, Japan requires domestic airlines to have less than a third of foreign capital.
Although Japan presents enormous opportunities, any plan to enter the country's domestic market would be fraught with difficulties because it is regarded as a relatively closed market. The country's two major carriers, Japan Airlines and All Nippon, are also considering forming low-cost subsidiaries.
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"I would have a crack at south-east Asian markets before I'd have a crack at Japan – it's really tough," an industry insider said. "China would be the hardest, followed by Japan."
The Yomiuri newspaper reported that Jetstar and China's Spring Airlines has approached Japan's transport ministry to inform them of their plans and seek approval.
A Jetstar spokesman could not comment immediately on the report.
Jetstar has been emphasising its intention to form other joint ventures in Asia in order to expand its footprint in the world's fastest growing aviation market.
Any joint venture in Japan is likely to be modelled on Jetstar Asia, the Singapore-based airline in which Qantas has a 49 per cent stake and Singaporean businessman Dennis Choo the rest.
Qantas also part-owns a stake in Vietnam's second-largest airline, Jetstar Pacific.
Qantas's chief executive, Alan Joyce, has highlighted his desire to form alliances with other Asian airlines, especially as its premium international operations face increased competition.
Macquarie Equities believes Qantas will cement a closer relationship with JAL before turning its attention to courting another Asian partner. Qantas has a code-share agreement with JAL between Australia and Japan.