Japan's ANA to end budget airline joint venture with AirAsia

TOKYO (Reuters) - Japanese airline ANA Holdings Inc said it will buy AirAsia Bhd out of a Tokyo-based budget airline joint venture and operate the business as a wholly owned subsidiary, dissolving an alliance after less than two years.

The low-cost airline joint venture, based at Tokyo's main international airport at Narita, has failed to win over Japanese travelers since it was set up in August 2011. ANA has blamed the poor performance of AirAsia Japan on ineffective marketing and a user-unfriendly booking website.

AirAsia said earlier this month it may dissolve the venture due to disagreement over how to operate the business. Executives from the Malaysian budget airline and ANA, which owns 67 percent of the venture, had been unable to find common ground on issues including cost management.

The breakup comes at a time when AirAsia is planning to expand overseas. However, the move is consistent with AirAsia's decisions to drop loss-making routes.

AirAsia Japan has been reporting losses since it began operations with flights to five local destinations and two in South Korea. The venture cut ANA's operating profit by about 3.5 billion yen ($35.87 million) in the year ended March, ANA's Senior Vice President Shinzo Shimizu said on Tuesday.

"We judged it would be better to operate the carrier as a wholly owned unit," Shimizu said at a press conference in Tokyo.

ANA did not say how much it will pay to buy out AirAsia.

ANA has another budget joint venture Peach based out of Osaka's Kansai airport. Local rival Japan Airlines operates Jetstar Japan, a joint venture with Qantas Airways that has bases in both Narita and Kansai.

Shimizu said ANA will decide in July how to operate the former AirAsia venture and will choose a name for the unit, which will use the AirAsia livery until November.

A possible merger with Peach was one option being considered, he added. ($1 = 97.5750 Japanese yen)

(Reporting by Tim Kelly; Editing by Ryan Woo)

Source: http://news.yahoo.com/japans-ana-end-join-budget-airline-venture-airasia-071431404.html

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