Abstract
Four LCCs (Low Cost Carriers) had entered into the Japanese domestic air market between 1998 and 2006 as a result of the deregulation of new entries. The government had preferentially assigned these four LCCs slots at Haneda airport to reduce airfares by stimulating market competition among LCCs and FSCs (Full Service Carriers), and to stabilize LCCs’ administration by giving them highly demanded routes from the primary airport in Tokyo. However, all of the four LCCs have faced difficulties in gaining stable independent administration and have been supported by the rival FSC, ANA as a stock holder. Only one LCC, Skymark, has maintained independent flight operations and pricing while the other three LCCs have operated codeshare flights with ANA and became complemental carriers of the ANA network. We estimated the yield function and found that only Skymark had induced a lower fare of its rival airlines. The codeshare flights had started to make the LCCs administration stable by the brand power of ANA. On the other hand, codesharing had significantly reduced the price competition between FSCs and LCCs. Therefore, slot allocation should be conducted with consideration of codesharing.
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Notes
- 1.
Air Asia Japan re-entered in 2017 and withdrew in 2021. Vanilla was merged into Peach in 2019.
- 2.
SFJ had served between Kitakyushu (KKJ) and Gimhae (PUS), South Korea from September 2012 to March 2014 and SKY provided some international charter flights.
- 3.
For instance, the normal fare of HND–KMI would be set at JPY27,900 (ANA and JAL) and JPY21,000 (SNJ) while the discount fare would be set at the same for the three airlines, JPY18,500 in December 2002. JFTC announced they had started to investigate the price matching of the discount fare in September 2002. Then, ANA and JAL voluntarily raised their discount fare to JPY22,000 and then JFTC cancelled their investigation.
- 4.
The Nikkei on 11th August 2015.
- 5.
One of the major creditors was Airbus, because SKY ordered six A380s but SKY canceled them. ANA asked Airbus to accept ANA’s investment in SKY on condition that ANA would buy three A380s instead of SKY and Airbus approved this offer. Finally, ANA became the third biggest stock holder of SKY with 16.50% of the total stocks.
- 6.
One short haul route between HND and HAC (Hachijojima), a small island in Tokyo is excluded.
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Acknowledgements
The earlier version was presented at LISS 2017 conference at Kyoto University, a seminar at the University of Waterloo and a monthly seminar of the Japan Society of Transport Economics in Tokyo. I am grateful to Anming Zhang, Xiaowen Fu, Benny Mantin and Kenzo Takeuchi for their valuable comments. This work was financially supported by JSPS KAKENHI Grant Number 19H01538 and International Maritime Research Center, Kobe University.
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Mizutani, J. (2023). Preferential Slot Allocation for LCCs at a Congested Airport, and Airfare: The Case of Haneda Airport in Tokyo. In: Mizutani, F., Urakami, T., Nakamura, E. (eds) Current Issues in Public Utilities and Public Policy. Kobe University Monograph Series in Social Science Research. Springer, Singapore. https://doi.org/10.1007/978-981-19-7489-2_6
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