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LCCs No Friend to Regional Revitalization

By Jasper Tolsma

SNA (Tokyo) — Local communities and governments hoping for an economic boost through a direct connection to Narita Airport’s newly-opened Terminal 3 might be in for a disappointment. The terminal currently hosts five low cost carriers (LCCs), companies that tend to operate only on highly profitable and popular routes.

Cheap air travel has been relatively slow to catch on in Japan. According to data from the Ministry of Land, Infrastructure, Transport and Tourism, only 6.1% of all flights departing from Narita in 2012 were operated by LCCs. By 2014, that percentage had risen to over 19%. While that may sound significant, it compares to a Southeast Asian market, for example, where LCCs now make up more than half of the market.

Aviation specialist Kotaro Toriumi explains this phenomenon at the business website NNA by noting that the Japanese still see air travel as a high-quality experience and not as a daily mode of transportation, unlike some other Asian countries.

Still, the new terminal at Narita Airport is not only a key development for cheap air travel in Japan, it is also a strategic move in the competition over market share between the airports in the massive Kanto region. Narita might be Japan’s most international airport, but with 70 million mostly domestic passengers on an annual basis, Haneda Airport is by far the largest. Narita’s new terminal is seen by analysts as an attempt to challenge Haneda’s dominance.

One point to note is that the LCCs gaining a bigger market share within Japan’s otherwise JAL-ANA led market doesn’t automatically mean that more diversity in destinations. According to Toriumi, LCCs will continue to mainly focus on popular routes in order to maximize their profits.

Skymark, one of the few Japanese airlines that did operate on less profitable routes throughout Japan, has recently filed for bankruptcy and is suspending most of its routes, troubling local communities that depended on the tourists that this airline’s connections brought in.

One of the local cities affected by this development is Yonago. When Skymark opened a Narita connection to this small city in central Japan, it saw almost an 8% increase in tourists visiting the town. The fear is that boost in tourism will disappear as soon as the service ends in September.

Yonago has lobbied Skymark to reinstate the connection, but that hasn’t had any positive results to date. The only connections that the city has now are to Naha and Kobe.

So while Narita Airport celebrates the opening of its new LCC terminal, local communities fear that they will lose their all-important economic lifelines to the national air networks.

Jasper Tolsma is a contributing writer to the Shingetsu News Agency.

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