Why Japan is the Most Interesting Aviation Market in the World
One of the more interesting conversations I had at the Phoenix Aviation Symposium was with Hitoshi Kawahara, director of international and regulatory affairs for ANA in Japan. I think the Japanese market, and Tokyo in particular, might be the most interesting ones in the world right now because of all the changes going on. After speaking with Kawahara, it sounds like the planning team is going to have a real challenge ahead.
There are really two big things happening and one small thing that have the potential to change Tokyo's travel landscape.
The Fall of Japan Air Lines Japan Air Lines (JAL) has long been the international carrier for Japan. While ANA has been known for its domestic and regional networks along with some long haul flying, JAL has carried the flag, figuratively and literally, around the world. But that is all changing.
JAL has been going through a massive restructuring. We now know they are going to continue to operate as a partner of American's in the oneworld alliance, but they're shrinking dramatically.
Just take a look at some of JAL's recent cuts. They will stop flying to Amsterdam, Bali, Milan, Rome... and the list goes on and on. Interestingly, they will end one of their most important routes historically. Japan Air Lines flight number 1 will no longer go between Narita and San Francisco. In fact, that route will be discontinued entirely in favor of a flight from Haneda instead. And that brings us to another point. As if the cutbacks by JAL aren't enough of an opportunity for ANA, the Haneda opening is an even bigger deal.
The Rise of Haneda Up until now, all international flights into Tokyo (except for a few short haul routes to neighboring countries) have gone to Narita, about an hour train ride northeast of the city. Narita has a curfew between 11pm and 6am so international flights are effectively banned to and from Tokyo during that time.
In the recent open skies deal between the US and Japan, Japan has finally decided to open up Haneda to international travel on a limited basis. Flights can primarily operate to the U.S. during the time when Narita is closed to curfew, but it's unclear if that restriction may be lifted. One thing is clear -- they have already bumped up the number of international slots allowed at Haneda so it may just be a matter of time before Haneda, closer to Tokyo on the south side, becomes an equal player with Narita.
If that happens, what does ANA do? There aren't really any parallels to this in the US. It would be like having a hub at Washington/Dulles for long haul and Washington/National for short haul. All of a sudden one day, National doubled the size of its runway and allowed flights to go around the world. What do you do?
Since Haneda is the closer airport to Tokyo itself and it has no curfew, you might be tempted to move a lot of flights there. But Hitoshi explains that much of the growth is toward Narita, and there is talk of building a high speed rail line that would make it even more accessible. So people will want service at both airports.
ANA currently has a large domestic operation at Haneda and an international structure that connects into key domestic markets at Narita. So those flights that are more for locals and connect into smaller domestic markets might benefit from flying into Haneda. Meanwhile, those that feed into larger domestic or other Asian markets would be best at Narita. For some markets, it might be a mix of both.
But at least both airports are slot-controlled, so ANA doesn't have to deal with a low cost carrier invasion, right? Maybe, but maybe not.
Birth of Ibaraki Airport Haneda and Narita are mostly full, so there isn't a ton of room for new entrants, but thanks to an economically insane project called Ibaraki Airport, there might be a way in.
Ibaraki is a huge white elephant. It's even further from Tokyo than Narita and there isn't great ground transportation access, but there's also a lot of empty pavement. Nobody wants to fly there right now, and it's likely to sit mostly empty, but if Ibaraki sounds at all like Hahn outside Frankfurt, then you might see an opportunity.
The cultures in Europe and Asia are obviously very different, there's no guarantee that a Ryanair-style model in Tokyo would work, and I don't even want to think about the air service agreements between Japan and surrounding countries, but there's plenty of room in that airport and I have to assume the landing fees will be desperately low.
You can see why the Tokyo market is so incredibly interesting right now. There are a ton of moving parts that make for a very interesting challenge.