The Age of ANA and the LCCs — The Democratization of the Skies

Last time, we watched Japan Airlines, once the national flag carrier, collapse into bankruptcy, take in Kazuo Inamori under the Corporate Reorganization Act, and head toward a painful rebuilding. While the company that had once lost its wings drew itself in, trying to return to the sky, the other wing was beating quietly but powerfully.

What we will see in this chapter are two great changes. One is the flow in which ANA, the latecomer challenger, finally climbed in scale to become Japan’s largest airline. The other is the movement in which a completely different kind of player — low-cost carriers, or LCCs — appeared in skies once occupied only by the two giants, and transformed air travel itself into something for the masses. The two changes would eventually intersect, and Japan’s skies would come to hold a diversity never seen before.

The Pursuer Takes the Lead

For a long time, the aviation world in Japan shared a sense that the master of international routes was JAL. The weight of the words ‘national flag carrier’ also supported that sense. Yet entering the 2010s, that picture was quietly repainted.

In the fiscal year after JAL’s bankruptcy, ANA is said to have surpassed JAL in group-wide revenue for the first time, and reports say ANA continued to widen the gap thereafter. What supported the leap above all was international routes. With the tailwind of an expansion in international slots at Haneda Airport, ANA aggressively widened its international route network; it is reported to have overtaken JAL in international revenue in fiscal 2013, and in passenger numbers in fiscal 2015. A company that had clawed its way up from domestic routes as a latecomer challenger now stood, in both name and substance, at the top of the domestic industry.

Still, this is not the simple tale of ‘ANA’s win, JAL’s loss.’ Having completed its rebuilding, JAL too would eventually relist and return as a highly profitable company. The balance of power between the two giants continued to sway thereafter by route, period, and metric. What is certain is that the old fixed division had crumbled, and an era had begun in which the two companies competed head-on.

A New Player Appears in the Sky

Just as the competition between the two giants was intensifying, a completely new kind of player appeared in the sky. The LCC — the low-cost carrier.

The LCC was born from the idea of thoroughly simplifying in-flight service, seat specifications, and the mechanics of operation, and lowering fares greatly in return. Checked baggage, seat selection, even in-flight drinks became extra charges, and the price was narrowed down to the act of carrying itself. This mechanism, which had already spread in the West and in Asia, finally landed in Japan in earnest.

The one that took the lead was Peach Aviation. Established in 2011 with investment from ANA Holdings and others, it began operations in 2012 with Kansai Airport as its base. Holding up the easy-to-understand phrase ‘a flying train, a flying bus,’ it broadened people’s travel options all at once with fares that could rival the Shinkansen and buses.

In that same year, 2012, Jetstar Japan — invested in by JAL, Qantas, and others — began operations with Narita Airport as its base. Because the two giants each became involved in an LCC, this year came to be called ‘the first year of Japan’s LCCs.’ Furthermore, several companies such as AirAsia Japan entered this new market. Japan’s skies entered an era in which the full-service two giants and the new entrants armed with low prices were mixed together.

When the Wall of Fares Crumbles

The biggest change brought by the arrival of the LCCs was the crumbling of the wall of price.

Until then, the airplane had been, compared with the Shinkansen and the highway bus, somehow a special vehicle. Not used unless for a business trip, a return to one’s hometown, or a particularly long journey — quite a few people held such a sense. Yet LCC fares, depending on the timing and on when one booked, could match the railway and the bus, or even fall below them. Flying off on a whim to a regional city for the weekend, casually heading to a neighboring Asian city. Such forms of travel ceased to be something only for special people.

For the two giants as well, the existence of the LCCs was not something to ignore. How to draw in price-sensitive users, how to protect the value of full service. ANA strengthened its direction of taking LCC operations into its own group with Peach at the center, and is reported to have later made it a wholly owned subsidiary. JAL too holds LCCs under its umbrella, and is said to have moved in recent years to rethink its brands. The two giants chose a complex way of facing an existence that could threaten their very footing — embracing it as part of the group.

A Diversified Sky, an Unchanging Competition

In this way, Japan’s skies in the 2010s took on a form more diverse than ever before. A JAL reborn from the national flag carrier, an ANA that climbed from latecomer to the largest scale, and the LCCs competing on fares under or outside the umbrella of the two giants. For users, both the routes they could choose and the price ranges they could choose widened beyond comparison with the past.

This means we had come quite far from the 45/47 system we saw in Episode 4 — an era when the state set the division between the two companies and protected them like a convoy fleet. From stability protected by regulation to free competition. That competition lowered fares, increased routes, and delivered air travel into the hands of many people. On the other hand, competition forces companies into ceaseless streamlining, and continues to confront them with an endless challenge: balancing the people who work and safety.

Light and shadow were back-to-back here too. The more the sky became something for the masses, the more the mechanisms that support that sky came to bear a greater load and responsibility. How many people and how many systems support this diverse, vibrant sky — the day we would be made keenly aware of that was drawing near, in an unexpected form, just around the corner.