Peach Aviation puts expansion to China on hold

Low-cost airline says demand down on island dispute between Japan and China

PUBLISHED : Tuesday, 19 March, 2013, 12:00am
UPDATED : Tuesday, 19 March, 2013, 4:18am

Peach Aviation, a low-cost carrier based in Osaka, has suspended its expansion to the mainland as demand between Japan and China has yet to recover from a downturn stemming from a conflict between the two countries over disputed islands.

"We plan to fly to Shanghai and Beijing this year and landing slots are ready," said Victor Chu, chairman of First Eastern Investment, which owns a third of Peach.

Since demand has yet to return, Chu said he would postpone the plan until there was sign of reconciliation between the two nations.

Peach, a 15 billion yen (HK$1.22 billion) joint venture between All Nippon Airways and First Eastern, is the first low-cost carrier in Japan. Its network now includes Hong Kong, Seoul and Taipei.

With a load factor approaching 80 per cent on average, Peach was contemplating adding more services to Hong Kong but the plan was stalled because of limited slots available at Hong Kong airport, Chu said. He had wanted to add a day-time departure slot to its midnight flight.

It already has two daily flights to Taipei and three daily services to Incheon.

Meanwhile, Peach is to set to open a second base in Naha, Okinawa, where it will use a converted cargo terminal.

Chu said the company was talking to the authorities to include customs, immigration and quarantine facilities at the terminal to make it viable for international flights.

More bases were in the pipeline, including domestic and international destinations, he added.

Peach operates 22 daily flights with seven aircraft to eight destinations.