Several news outlets reported last night that ANA has decided to merge its two low-cost subsidiaries – Vanilla Air (100% owned) and Peach Aviation (67% owned) – by 2020.
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The Upcoming Peach Aviation and Vanilla Air Merger
Currently, Peach Aviation ranks as the second largest Japanese carrier in Japan and Vanilla Air as the third. However, once the two carriers’ sales are combined, they are expected to become the largest LCC in the country, overtaking Jetstar Japan.
While details are not yet confirmed, it is expected that the combined airline will operate under the Peach Aviation brand.
Given that both airlines operate only Airbus A320 aircraft, the merger will allow the combined airline to not only mix crews between the two pre-merger groups, but also to save on maintenance and other costs thanks to the larger scale.
Another fact that helps is the lack of overlap between the two airlines’ routes due to Peach focusing on Osaka and Vanilla Air on Tokyo. In fact, out of the couple of overlapping routes, Vanilla Air already announced that it will be axing its Tokyo Narita – Osaka route.
A Platform to Farther Destinations
Besides using the merger to strengthen its position in the Japanese domestic LCC market, ANA also aims to use the larger carrier as a platform for expanding its international low-cost operations.
While now, both of the low-cost carriers mostly operate relatively short international routes to Korea, Taiwan, and Hong Kong now, ANA plans to launch medium-haul low-cost routes within the next two years as well.
As such, soon, we might see Peach Aviation flying between Tokyo and Osaka, and Southeast Asian countries.