c933103 wrote:

Future of the airlines is unclear as the CEO of the AirAsia group indicated the possibility of reviewing their business in Japan in September.
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I guess what all these actually mean is that we are now going to witness another victim of the current situation? AirAsia Japan is a relatively new entrance to the Japanese market hence I think it still haven't established itself as a large enough player to withstand the current level of irregularities.

Yeah, Tony Fernades did literally considering Japan exit:

https://www.ch-aviation.com/portal/news ... japan-exit

AirAsia Group is also reviewing its AirAsia Japan (DJ, Nagoya Chubu) business, Fernandes confirmed, but its AirAsia India (I5, Chennai) joint venture with Tata Sons will remain unchanged.

“I think Japan is something we have to really think hard about. If we had tonnes of cash, then it’s something we would probably continue. I think we will have decisions on Japan very soon,” he said without elaborating.

Not really killing DJ, but AK has a chance to sell DJ to some worthy owners who weren't damaged so much in the pandemic (for example VietJet,...)

Keep in mind that this is AirAsia Japan 2.0; the original AirAsia Japan (DJ is notably the code for both 1.0 and 2.0, so in this example, I will refer to it as DJ1) was a JV between AirAsia (AK) and ANA (NH) that started service in July 2011 and was based at NRT. AK later gave up its stake in DJ1 leaving NH as the largest shareholder, and NH proceeded to rebrand DJ1 as Vanilla Air (JW) after October 2013. DJ1's aircraft however returned to the AK-umbrella and thus NH sourced new aircraft for JW. JW itself was later merged into Peach, NH's other LCC, by October 2019.

The current AirAsia Japan (which I will refer to as DJ2) is a JV between AK and various Japanese investors which was founded in 2014, before starting ops in 2017 with NGO as the chosen base.

The latest development in this story is The Nikkei on 30 September reporting that AirAsia Japan will be closed, with an announcement expected this coming Monday (5 October):

A source close to the company told Nikkei that AirAsia's directors, who met on Monday at the airline's headquarters near Kuala Lumpur International Airport, have decided to wind up the operations of AirAsia Japan -- a joint venture between AirAsia and Japanese partners.

AirAsia Japan has informed the Aichi local government of its intention to give up the business, Kyodo reported on Wednesday citing an unnamed official. The company has two aircraft based at Nagoya Chubu Centrair International Airport in Aichi.

"An announcement is expected next Monday" and the Japanese operation "will be closed down," said the source, who cannot be named as the information is private.

The person said factors contributing to the decision include that AirAsia Japan stopped selling tickets earlier this month, lack of demand and gloomy prospects for travel in Japan.

https://asia.nikkei.com/Business/Transp ... nt-venture

Between the two attempts at DJ, it seemed to be the weakest of the three emergent LCCs in Japan over this past decade, with Peach (MM) and Jetstar Japan (GK) as the other two being substantially backed by NH and JL/QF respectively, whether the LCCs' respective financial results were positive or were loss-leading (MM eventually recorded profits, GK was loss-making and received capital injections from JL/QF, and JW was bleeding money to the point it was merged with MM). Putting this into perspective, MM has upwards of 30 aircraft (after inheriting most of JW's aircraft), while GK is not far behind with 25, compared to DJ's peak fleet of 3 aircraft whether as the 2011-2013 DJ1 or the 2017-present DJ2. The Nikkei had also previously reported that DJ1 historically had the lowest load factors of the LCCs, though I can't factually say either way the performance of DJ2.

Is AirAsia 2.0's potential closure due to COVID or were they already struggling even before then? What about Spring Airlines Japan, how are they doing?

But seriously, from 2017 until today DJ 2.0 only has a fleet of three aircraft? That doesn't sound like a strong airline at all, which could suggest they were already struggling even before the pandemic.

filipinoavgeek wrote:

Is AirAsia 2.0's potential closure due to COVID or were they already struggling even before then? What about Spring Airlines Japan, how are they doing?

filipinoavgeek wrote:

But seriously, from 2017 until today DJ 2.0 only has a fleet of three aircraft? That doesn't sound like a strong airline at all, which could suggest they were already struggling even before the pandemic.

Indeed AirAsia Japan 2.0's growth was quite slow (after already launching 2 years behind schedule) compared to that of Peach's or Jetstar Japan's, whether its Japan-based investors were neither ANA nor JAL or its only base was NGO, compared to Peach's main base at KIX (+ OKA/SDJ/NRT) and Jetstar Japan's main base at NRT (+ KIX/NGO). That much and regarding their pre-covid performance however is purely my own observation/opinion (in that whether this being an effect of intentionally conservative operations, not having the resources and backing, or NGO not being big enough compared to NRT/KIX to support faster expansion and two LCCs, I can't say), although AirAsia Japan was at least due an A320neo as its fourth aircraft in 2020 (pre-covid), and the NGO-FUK route originally planned for this past February did eventually launch in August during the temporary resumption, so there was at least a little expansion made.

According to this (Japanese only), Spring Airlines Japan (IJ) is in the red (harder to specify if this was the case pre-covid as well) and undergoing furloughs alongside service/frequency reductions in current covid circumstances as would be expected, but is at least planning resumption of NRT-TSN in anticipation of the CAAC reopening Chinese borders. At least as of late-August they had most of their (very reduced) schedules mostly for up to the December holidays, after which they'll decide what to do.

c933103 wrote:

https://www.aviationwire.jp/archives/210897 (Japanese)
According to the report, AirAsia Japan's regular schedule have four routes, including three domestic flights to Sapporo, Sendai and Fukuoka as well as one international flight to Taipei.
In August, they announced that their domestic operation will resume after four months of operation suspension, however in September till now they only operated a grand total of two return trips to Sapporo in the entire month. It is now officially announced that all their flights in most of October until the end of summer schedule will be cancelled, which cover a long weekend. It is reported that there are people who have purchased ticket from them for travel during this period of time asking for refund over their Twitter and Facebook and Email but the company have not provided any response according to users description. Future of the airlines is unclear as the CEO of the AirAsia group indicated the possibility of reviewing their business in Japan in September.
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I guess what all these actually mean is that we are now going to witness another victim of the current situation? AirAsia Japan is a relatively new entrance to the Japanese market hence I think it still haven't established itself as a large enough player to withstand the current level of irregularities.

I think this is a reason the recovery will take a while. People have been burned by even the big players canceling flights and not refunding their money. Same is true for hotels and resorts. People are going to hold on to their money till they feel confident they'll actually get what they pay for.

As previously expected for Monday/5 October, AirAsia Japan's shutdown was announced today.

https://www.reuters.com/article/airasia ... SL4N2GW1QP

Malaysia’s flagship budget airline AirAsia Group Bhd is ceasing its Japanese operations immediately, the carrier said in a bourse filing on Monday.
The airline said it has been notified that the board of directors of its majority-own subsidiary AirAsia Japan (AAJ) has taken a decision to cease operations with immediate effect.

mooseofspruce wrote:

As previously expected for Monday/5 October, AirAsia Japan's shutdown was announced today.

https://www.reuters.com/article/airasia ... SL4N2GW1QP

Malaysia’s flagship budget airline AirAsia Group Bhd is ceasing its Japanese operations immediately, the carrier said in a bourse filing on Monday.
The airline said it has been notified that the board of directors of its majority-own subsidiary AirAsia Japan (AAJ) has taken a decision to cease operations with immediate effect.

Unfortunately, AirAsia is in significant trouble.

I hope passengers receive a refund. I would expect credit card companies to withhold more to all AirAsia airlines, which will not help in these times.

Lightsaber

mooseofspruce wrote:

As previously expected for Monday/5 October, AirAsia Japan's shutdown was announced today.

https://www.reuters.com/article/airasia ... SL4N2GW1QP

Malaysia’s flagship budget airline AirAsia Group Bhd is ceasing its Japanese operations immediately, the carrier said in a bourse filing on Monday.
The airline said it has been notified that the board of directors of its majority-own subsidiary AirAsia Japan (AAJ) has taken a decision to cease operations with immediate effect.

Given that they weren't able to expand beyond three aircraft and had such a tiny route network, maybe the pandemic merely hastened the inevitable and they were going to close sooner or later anyway. AirAsia's near-term future seems cloudy right now given that there are also reports that their long-struggling Indian operation may either fold or be sold.

Also, shouldn't the thread title be changed to reflect the closure?

Saw that AirAsia Japan is shutting down on Japanese news and came here.

No surprise at all. Their expansion were extremely slow pre-virus, and they never have much of a presence anyway.

And unlike IJ (Spring Japan), which also struggles to get any foothold in the Japanese domestic market, AirAsia parent themselves are struggling. Spring Japan at least had that China->Japan tourism market (pre-virus, of course) where they can make some money.

Formal company annoucement

AirAsia Japan: Announcement of Cessation of Operations
https://newsroom.airasia.com/news/2020/ ... ncement-en

The next risky one in the AK Group is Air Asia X, that is one to watch.

zakuivcustom wrote:

No surprise at all. Their expansion were extremely slow pre-virus, and they never have much of a presence anyway.

What caused their slow expansion in the first place? Intense competition? Conservatism? Lack of funds? A combination of these and other factors? Even their India subsidiary (which could be next on the chopping block) managed to expand faster.

jeffrey0032j wrote:

The next risky one in the AK Group is Air Asia X, that is one to watch.

A lot of people online and I think even some analysts (CAPA?) think that long-haul low-cost carriers do well but it seems that hasn't been the case for years. Why is that so and why do people still think they can do well when in practice that hasn't happened?

jeffrey0032j wrote:

The next risky one in the AK Group is Air Asia X, that is one to watch.

In my opinion, far more than that, we are going off topic. What it means is no hope of an AirAsia Japan survival plan as the parent company is:

Ceasing funding India Venture:
https://www.irishtimes.com/business/tra ... 2?mode=amp

Tata buying AirAsia stake:
https://www.khaleejtimes.com/business/a ... jv-airline

AirAsia laying off (last week Malaysia and AirAsiaX):

https://www.reuters.com/article/airasia ... NL4N2GP2DT


The group is, in my opinion, technically bankrupt.

Lightsaber

AK's struggles in Japan are giving me strong AirAsia Philippines vibes. The latter also struggled early on with a tiny fleet and an inconvenient base (CRK), and had it not been for their merger with ZestAir would likely have left the Philippine market too. I wonder if there were any opportunities for DJ 2.0 (DJ 1.0 was apparently doomed from the start with AK being unhappy with NH owning a majority stake and DJ not really understanding the Japanese market and sales networks at the time), or if it too was simply doomed no matter what.

lightsaber wrote:

jeffrey0032j wrote:

The next risky one in the AK Group is Air Asia X, that is one to watch.

In my opinion, far more than that, we are going off topic. What it means is no hope of an AirAsia Japan survival plan as the parent company is:

Ceasing funding India Venture:
https://www.irishtimes.com/business/tra ... 2?mode=amp

Tata buying AirAsia stake:
https://www.khaleejtimes.com/business/a ... jv-airline

AirAsia laying off (last week Malaysia and AirAsiaX):

https://www.reuters.com/article/airasia ... NL4N2GP2DT


The group is, in my opinion, technically bankrupt.

Lightsaber

I'm not sure I follow you. Firms establish subsidiaries all the time. Part of that is tax efficiency - to declare earnings in jurisdictions of lowest tax. Some of it is in anticipation of spin-off. Some of it is to limit liability. But some of it also makes it easy to dump underperforming subsidiaries. It doesn't imply that the parent company can't continue. Even a little $2 Billion company can have more than a hundred subsidiaries worldwide.

After the death of Jetstar Pacific VN (basically QF withdrew all stakes and literally saved by the wealthy and slightly-damaged VN), now we see AirAsia JP became the next one.
I am doubting the survival ability of the big airlines' group (Jetstar, AirAsia, Lion,...) these days as they are even struggling to save themselves, result in the death of their subsidiaries.

I wonder if AirAsia India is next.

MIflyer12 wrote:

lightsaber wrote:

jeffrey0032j wrote:

The next risky one in the AK Group is Air Asia X, that is one to watch.

In my opinion, far more than that, we are going off topic. What it means is no hope of an AirAsia Japan survival plan as the parent company is:

Ceasing funding India Venture:
https://www.irishtimes.com/business/tra ... 2?mode=amp

Tata buying AirAsia stake:
https://www.khaleejtimes.com/business/a ... jv-airline

AirAsia laying off (last week Malaysia and AirAsiaX):

https://www.reuters.com/article/airasia ... NL4N2GP2DT


The group is, in my opinion, technically bankrupt.

Lightsaber

I'm not sure I follow you. Firms establish subsidiaries all the time. Part of that is tax efficiency - to declare earnings in jurisdictions of lowest tax. Some of it is in anticipation of spin-off. Some of it is to limit liability. But some of it also makes it easy to dump underperforming subsidiaries. It doesn't imply that the parent company can't continue. Even a little $2 Billion company can have more than a hundred subsidiaries worldwide.

My point is there are no funds as the whole organization is in trouble. There couldn't be a worse time to sell sn airline and they are selling subsidiaries.

The AirAsia group isn't accepting their A320NEOs or A330NEOs, shutting down in a major market, selling out in what was a fast growing market (India).

The parent company is defunct by any measure.

A highly leveraged growth company in a major recession. What happens?

Lightsaber

Antaras wrote:

After the death of Jetstar Pacific VN (basically QF withdrew all stakes and literally saved by the wealthy and slightly-damaged VN), now we see AirAsia JP became the next one.
I am doubting the survival ability of the big airlines' group (Jetstar, AirAsia, Lion,...) these days as they are even struggling to save themselves, result in the death of their subsidiaries.

In both cases they've been struggling from day 1 well before pandemic so nothing here is surprising.

QF never owned more than 20% in Jetstar Pacific IIRC and it has been a constant struggle. AirAsia never succeeded in managing a domestic operation in Japan - too much competition and never really understands the market, thought a copy-cat of other subsidiary's experience will do the job.

Jetstar Japan on the other hand is far more successful than either of these two operations.

Michael

I think part of the problem encountered by the Japan and India operations is the heavy hand of the government and regulatory authorities. Airasia Japan had loads of problems getting approvals for routes and Airasia India had a lot of political (nationalistic) sentiment working against it. Before the Covid 19 pandemic, the AirAsia Group could still take those losses. The worldwide aviation industry shutdown was too much of a hit for them, especially as they did not get any government aid. As we can see today, even Cathay Pacific (with a government bailout) had to shut down one of its units (Cathay Dragon) and cut 8,500 jobs. This industry is being wiped out by travel restrictions and I won't be surprised if we see more job losses and bankruptcies.

eamondzhang wrote:

QF never owned more than 20% in Jetstar Pacific IIRC and it has been a constant struggle.

No. QF owned up to 30% of Jetstar Pacific before the quit. Remember at the time of QF's investment in BL, a foreign investor could only own a maximum of 30% stakes in a Vietnamese carrier so obviously, QF took as much as possible. That limitation is broadened up to 34% but seems like QF/JQ had no more interest in BL.

However, I do agree that Jetstar Pacific VN and AirAsia JP were failures from the beginning: the investors (AirAsia/Qantas-Jetstar) seem didn't know how the markets work so they couldn't well-manage their highly-expected subsidiaries.

eamondzhang wrote:

AirAsia never succeeded in managing a domestic operation in Japan - too much competition and never really understands the market, thought a copy-cat of other subsidiary's experience will do the job.

Wasn't one factor for the failure AirAsia Japan 1.0 not using traditional (for the Japanese market) ticketing mediums? I remember CAPA mentioning at the time that AirAsia Japan tried doing things their way instead of adapting their model for the Japanese market (I think that even included check-in times, which was much less lenient compared to other Japanese carriers and even its LCC competitors).

flee wrote:

As we can see today, even Cathay Pacific (with a government bailout) had to shut down one of its units (Cathay Dragon) and cut 8,500 jobs. This industry is being wiped out by travel restrictions and I won't be surprised if we see more job losses and bankruptcies.

I imagine in CX's case the pandemic was a major blow but they had already been weakened by the HK political crisis before that.

The company formally filed for bankruptcy and liquidation. Outstanding debt ¥21.7bil (US $208mil)

https://www.thestar.com.my/business/bus ... avel-slump

LAXintl wrote:

The company formally filed for bankruptcy and liquidation. Outstanding debt ¥21.7bil (US $208mil)

https://www.thestar.com.my/business/bus ... avel-slump

It makes one wonder if they would have lasted longer (like at least another year or more) had it not been for the pandemic, or if this was going to happen sooner or later and the slump just accelerated the inevitable.

filipinoavgeek wrote:

LAXintl wrote:

The company formally filed for bankruptcy and liquidation. Outstanding debt ¥21.7bil (US $208mil)

https://www.thestar.com.my/business/bus ... avel-slump

It makes one wonder if they would have lasted longer (like at least another year or more) had it not been for the pandemic, or if this was going to happen sooner or later and the slump just accelerated the inevitable.

I don't think it would have made much of a difference - the Japanese authorities have been very slow in approving their new routes. It is as if they are trying to protect JAL and ANA owned LCCs from more competition. The red tape has slowed the establishment and growth of the airline. So, it is wise to cut losses.