JAL eyes launch of low-cost domestic carrier in 2012

TOKYO, July 1 Kyodo

Japan Airlines Corp., now under a court-supervised rehabilitationprocess, is making arrangements to launch a low-cost carrier for domestic flights possibly in 2012, sources familiar with the matter said Friday.

To this end, JAL envisions setting up a joint venture with Jetstar Airways Pty Ltd., the budget offshoot of Australia's Qantas, the sources said.

Since JAL's rival All Nippon Airways Co. is planning to launch low-cost carrier Peach Aviation with its business allies next March, Japan's civil aviation market may see vigorous competition among low-cost carriers.

The proportions of equity stakes to be held by JAL and Jetstar inthe joint venture are under discussion, centering on a proposal to let each own some 30 percent, the sources said.

JAL and Jetstar are considering having the new carrier operate international flights with such Asian countries as China and South Korea down the track, they said.

Low-cost carriers refer to budget carriers limiting air fares to around half those charged by ordinary airlines for relatively short routes by simplifying a range of services, including meals and beverages, and hiking the efficiency of their operations.

Several overseas low-cost carriers are now moving to inaugurate flights to Japanese destinations.