82 AUSTRALIAN AVIATION
a few more domestic points as well.
Hopefully through that process in a
few years’ time when the new Peach
emerges we’ll still have the biggest and
best domestic network.”
There has also been a culture shift
in the attitude towards budget flying
in Japan. Many analysts predicted
it wouldn’t succeed because the
Japanese were too accustomed to the
powerful full-service offerings of JAL
and ANA, which had dominated the
market for years.
“That sort of headline was in every
other market too,” says Rohrlach.
“They said that in Australia back when
Virgin Blue came in 1999. I think
every market goes through that initial
hesitation phase and then there are
always, almost like a new technology,
early adopters.
But we’re right now into what
I describe as the maturity stage. It
is quite common now for people in
Japan to fly LCCs. Is it everybody’s cup
of tea? Of course not. Certainly, there
are still people who hold out just in the
same way that some people still prefer
to go to bank counters.”
Today, Japan’s low-cost sector
holds around 12 per cent of the
market. Government forecasts predict
this will rise to 30 per cent by 2030.
“I am sure like any forecast you can
probably find a range of people who
have slightly different views to that.
But as far as Jetstar is concerned we
assume that is probably about right,”
says Rohrlach.
“The only thing that might
hold us back in Japan is probably
infrastructure.”
As in many other countries
around the region, major airports are
heavily congested and suffer from
slot constraints. However, Narita has
recently announced it is expanding
its terminals, lengthening its second
runway and adding a third runway.
Both Narita and Osaka now have LCC
terminals and Nagoya is building a
similar facility. Besides, away from
the big hubs at Tokyo and Osaka,
where Jetstar is venturing into many
secondary locations, the congestion is
nowhere near as bad.
International expansion certainly
isn’t off Jetstar’s agenda but it is being
extremely cautious on that front.
“We’ve got the Shanghai route
at the moment. We are facing
competition from the other end in a
lot of cases, so that includes Chinese
LCCs coming in. We just have to
pick the right battles. It is a matter
of finding a market that will respond
well to the Jetstar product, where we
believe we can get the demand at the
right price,” says Rohrlach.
“Shanghai works for us. As aresult, we probably haven’t gone to
every single Chinese city. There’s
a lot of demand out there but it’s
got to be profitable. We are being
selective. We are always looking
at whether the next aircraft is
going to be used domestically or
internationally and so far most of
those have gone to domestic. We will
take it as each aircraft comes up and
seeing where the right market is.
So far, we have seen more domestic
opportunities than international,
including China.”
In terms of fleet, Jetstar’s business
plan commits to 28 aircraft by next
year, although it isn’t set in stone.
“We have said publicly we are
committed to 28 aircraft by 2019. We
have a different style,” Rohrlach says.
“They (Peach and Vanilla) talk about
bigger numbers and longer term. We
don’t discuss numbers beyond then
but obviously we are going to look to
grow and that alone would say that
with my target of staying number one
domestically we will have to do more
than 28 aircraft. We were looking at
that plan anyway, independent of the
merger.
“Frankly, there is actually enough
room for both of us. We’d both
have to grow quite a lot just for the
industry to get close to that 30 per
cent marketshare forecast. I thinkLow-cost carriers comprise
only 12 per cent of Japanese
domestic air traffic.ROB FINLAYSON