The encyclopedia · Strategy & Leadership · Strategic decision · 2012–2020
AirAsia tried to fly in Japan twice — both times it crashed
The first AirAsia Japan lasted 14 months with ANA. The second, with Rakuten, lasted three years. COVID ended it, but the model never worked.
AirAsia Japan · AirAsia · 2020-11-17
What happened
AirAsia's first attempt at a Japanese subsidiary was a joint venture with ANA, launched in August 2012. It lasted fourteen months: operations ended in October 2013 after the partners could not agree on strategy. ANA rebranded the operation as Vanilla Air. AirAsia's founder Tony Fernandes did not give up.
The second AirAsia Japan was established in July 2014 with Rakuten and other partners. AirAsia Malaysia held a 33% stake. Operations did not begin until October 2017 — two years later than planned — flying from Chubu Centrair International Airport near Nagoya. The airline operated three leased Airbus A320s on four routes: Sapporo, Sendai, Fukuoka domestically, and Taipei internationally.
The airline never achieved the scale or load factors needed to sustain a low-cost model from a secondary hub. When COVID-19 hit in 2020, passenger demand collapsed. The last flight operated on 22 September 2020. On 5 October, AirAsia Japan notified the transport ministry it would cease all operations by 5 December. It filed for bankruptcy with the Tokyo District Court on 17 November 2020.
Liabilities totalled ¥21.7 billion. Approximately ¥370 million in air tickets went unrefunded. The three A320s were ferried out of Japan via Naha to Singapore and Kuala Lumpur by January 2021. The Tokyo District Court formally commenced bankruptcy proceedings on 24 February 2021. It was the first Japanese domestic airline bankruptcy attributed to COVID-related demand collapse.
Why it happened
- AirAsia's low-cost model depends on high-frequency point-to-point routes from congested hubs; Chubu Centrair is a secondary airport without the passenger volume to sustain it
- The first venture with ANA failed in 14 months over strategy; the second repeated the pattern — a foreign LCC partnering with a Japanese incumbent without resolving the mismatch
- Operations started two years late, burning capital before the first passenger boarded, and the airline never reached the scale needed for unit-cost competitiveness
- COVID removed the remaining demand, but Aviation Wire noted that management and strategic problems predated the pandemic — the airline was already struggling
The lesson
A low-cost model transplanted to different airport economics is not the same business. If the first attempt fails on strategy, a second with a new partner but the same model fails the same way.
Aftermath
AirAsia Group's other affiliates — Thai AirAsia, AirAsia Philippines — continued operating Japan routes. The AirAsia Japan case is studied in Japanese aviation circles as evidence that the LCC model requires specific hub conditions that not every regional airport can provide.
Sources
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