Abstract

In 2012 All Nippon Airways (ANA) entered the low-cost segment in Japan by launching an affiliate company Peach and a Joint Venture with the Malaysian Group Air Asia called Air Asia Japan. This dual strategy aimed at enhancing new business domains in a relatively new market. After one year of operations, both companies are facing troubles: Peach faced financial loss and operations failures whereas Air Asia Japan had ended its operations in October 2013. The latter has already been restructured in another company Vanilla Air, a wholly owned subsidiary of ANA. The LCC have been expanding in Asia during the past few years and 47 companies are operating in Asia Pacific. 12 other companies are up to emerge in 2014. In Japan, deregulation in the air transportation has begun in 1980’s and this new wave of LCC is supported by the government as a new way to achieve economic re development. As Vanilla Air is slowly tackling the market with operations in five routes, Peach announced in late May 2014 the cancellation of around 900 flights for the next two months. The case focuses on the diversification strategy of ANA as a premium brand in a low-cost segment, the long term survival of the entry modes and the new business model that ANA implemented.

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