Airbus Cuts Through Headwinds into Japan

 - February 25, 2011, 10:00 AM
Airbus COO for customers John Leahy (l) and Airbus president and CEO Tom Enders (r) flank Skymark Airlines president Shinichi Nishikubo during the celebration of Airbus’s first sale of an A380 in Japan. [Photo: Airbus]

Airbus’s first firm order for A380s from a Japanese customer last week not only added a significant tally to its backlog, but it might have represented a watershed event in the company’s efforts to loosen Boeing’s stranglehold on the lucrative market.

The contract, a firm order for four superjumbos from Skymark Airlines, came some six years since Airbus last drew an order for civil airplanes from a Japanese airline. A country famously bound by its traditions, Japan and its legacy airlines have ordered Boeing products almost exclusively for some five decades. Indeed, it probably should come as no surprise that it took a non-legacy, low-fare carrier to break with convention.

Airbus’ other big breakthrough in Japan this month also involved a new low-fare airline, majority owned by All Nippon Airways (ANA)–the launch customer for the Boeing 787. ANA subsidiary A&F Aviation said it would lease 10 A320s from GECAS, in yet a further sign that Boeing no longer enjoys virtual exclusive access to Japanese airline markets.

ANA and First Eastern Investment Group plan to launch the new airline from Osaka during the second half of ANA’s fiscal year, meaning some time after October 1. Again, it should come as little surprise that the transaction involved a low-fare airline, and one controlled by ANA, which became Airbus’ second customer in Japan when it ordered 10 A320s in 1987.

“We are a late-comer to Japan,” conceded an Airbus Japan spokesman in an e-mail communiqué with AIN. “Airbus Japan was established only 10 years ago, while our competitor [has been] doing business in Japan for more than 50 years. In general, late-comers, even Japanese companies, have disadvantages in the Japanese market. However, Airbus started business anywhere in the world from scratch. In other words, we have room here in Japan for improvement.”

Airbus forecasts a 20-year market in Japan for some 570 new passenger and freighter aircraft, valued at $106 billion. Out of 571 new aircraft required through 2028, it expects single-aisle equipment will account for 169, twin-aisle 304 and so-called VLAs (very large aircraft) 98. It projects a need for 518 passenger aircraft and 53 freighters.

The company believes an increasingly price-sensitive demographic will drive further low-fare traffic growth in Japan, while an increasing Japanese expatriate population and a growing number of foreign business travelers propel an expansion in international travel to and from the island nation.