With the news earlier this summer that AirAsia plans a return to the Japanese market in 2015, it seems like a good time to take a look at the evolution of LCCs in Japan and ask what the planners need to be considering now in order to accommodate tomorrow’s airlines.

Japan has always promoted competition in its domestic market, however there is still considerable regulation and gaining access to the country’s main hubs is difficult for new entrants due to a lack of slot availability. A truly competitive Japanese aviation market needs to facilitate LCC growth and that will almost certainly require new airport infrastructure – but are dedicated low cost terminals really the answer?

LCCs have just 17% of the domestic market in Japan, and 9% of international capacity and by comparison to the wider Asian region where LCCs typically account for a quarter of the market, it is clear there is still considerable potential for growth.  And they are growing fast – averaging 28% growth each year for the last five years – compared to traditional carriers who have seen just 1% annual growth for the same period.   Whilst LCCs are not as yet challenging the old guard of ANA and JAL – we question for how much longer given their rapid growth. How might these carriers respond?

For a more in depth discussion of these issues, and a comprehensive overview of LCCs in Japan, click here to access our White Paper.