Some American companies and business travelers lean heavily on low-cost carriers in the USA to get where they need to go while keeping expenses as low as possible.
Southwest Airlines is perhaps the best-known LCC in the United States, famous for its affordable fares and limited fees that give it a leg up on legacy carriers like Delta, American and United. That’s one reason why so many competitors are trying to follow the Southwest formula, including Allegiant, JetBlue, Spirit and others.
But the low-cost carrier revolution hasn’t spread as rapidly around the globe in years past, especially in legacy-dominated Japan. But, in 2017, emerging signs indicate that Japanese LCCs may be making strides toward growing market share and achieving a more secure place in the country’s transportation economy.
Here’s a look at some of the factors behind the growth of Japan’s LCCs, as well as what that might mean for American companies who regularly send team members to Asia.
The Gap Between Japan’s Legacy vs. Low-Cost Carriers
Japan’s is part of what is commonly classified in the transportation industry as Northeast Asia. In the Northeast Asia market, LCCs make up only 13% of airline market share. This is actually a 2% increase over 2016. But LCCs in Northeast Asia still have a long way to go to catch up with the rest of the world.
In Southwest Asia, LCCs own 51% of the market. Western Europe’s LCCs have 44% market share, and North America’s LCCs claim 33% of the market.
Why the disparity? Until 2012, stringent regulations made it difficult for LCCs to enter the market and gain traction. And, also, the Japanese people live in a culture that looks derisively at anything considered “cheap” or a “budget” option.
Practical Needs Lead to Growth
After the deregulation of 2012, a range of LCCs entered the Japanese market, including Vanilla Air, Spring, Peach and Jetstar. Only Spring operates independent of either Air Japan or All Nippon Airways — Japan’s two largest legacy carriers.
But this much is certain: LCCs are adding capacity year over year while Air Japan and All Nippon Airways are remaining stagnant. What’s driving this growth in capacity? Practical needs.
Many small businesses that have cost-conscious travel budgets are using LCCs to travel around the region, both inside and outside of Japan. A Jetstar survey showed that about 20% of its passengers are traveling for business, which has inspired the company to grow its fleet from 21 planes to 28 by 2019.
Banks, pharmaceutical companies and media organization remain resistant to LCCs. But, if LCCs continue to grow in Japan and throughout Northeast Asia, their brand may become more mainstream and less “cheap” or “budget,” just as Southwest Airlines transformed from a novelty at its inception in the 1970s into a well-known, well-liked and highly trusted option for both personal and business travel in the 21st century.
What Does This Mean for American Companies?
In time, Japanese LCCs could become an attractive option for American business travelers who are taking multi-leg trips through Northeast Asia. For example, a business traveler may consider taking a legacy carrier across the Pacific, using LCCs for multiple stops in the region, then taking a legacy carrier for the long flight home.
Emerging signs indicate that Japanese LCCs may be making strides toward growing market share and achieving a more secure place in the country’s transportation economy.
The only thing holding back Japanese LLCs from serving business travelers is their inclusion on corporate travel booking tools. These booking platforms tend to focus first and foremost on safety and security before including low-cost carriers. If Japan’s LCCs establish strong safety track records, their inclusion in corporate booking channels could skyrocket.
Do You Have the Corporate Travel Support You Need?
There’s so much to consider when you send team members around the world on business trips. Having the right corporate travel agency as a partner means that you can focus less on all the details and focus more on what’s important — getting a strong return on your investment in business travel, and creating the best possible travel experiences for your team members.
At JTB Business Travel, we serve organizations and companies large and small with a focus on common sense. We keep up with trends and changes across the travel industry, such as the rise of LCCs in Japan, so that you don’t have to. Do you have the corporate travel support you need? If not, get in touch with us to learn more about how our common-sense approach to corporate travel can benefit your business.
Contact us today to learn more about how we help organization just like yours.