ANA Doubles United Venture Sales Boost With Business Travel
All Nippon Airways Co. (9202), Japan’s largest carrier, expects to more than double the sales boost it gets from a tie-up with United Continental Holdings Inc. (UAL) this fiscal year as new services and improved connections lure fliers.
The Asia-Americas flights venture will “conservatively” generate 4 billion yen ($48 million) of extra revenue for ANA in the year ending March, Executive Vice President Keisuke Okada said in an interview this week in Tokyo. That compares with 1.6 billion yen in the preceding 12 months, the partnership’s first full year.
ANA also anticipates a 1.5 billion yen sales boost this fiscal year from collaboration on European routes with Deutsche Lufthansa AG (LHA), as the Tokyo-based carrier uses cooperation to help cut costs and offer passengers a wider range of flights. The tie-ups let the airlines coordinate schedules and cross-sell tickets, as well as sharing revenue and costs.
“The contribution to ANA from these ventures is going to increase even further,” said Haruo Ushiba, a director at Japan Aviation Management Research. “There’s no doubt that joint ventures within alliances are a successful business model in the medium-term and will become a growing global trend.”
ANA’s venture with United covers 26 routes, including flights from Japan to Hong Kong, Singapore, Thailand and the U.S. The carrier’s planned Tokyo-San Jose service and United’s pending Denver-Tokyo route will be added next year, Okada said.
ANA’s connecting passengers from United flights rose 40 percent in the six months ended September from a year earlier, Okada said. The airlines formed the venture, which has antitrust immunity, following the 2010 signing of an open-skies agreement between the U.S. and Japan.
“We had problems expanding our corporate sales overseas before the ventures,” Okada said. “Now, with the help of United and Lufthansa, our sales extend around the world.”
The Japanese carrier fell 0.6 percent to 175 yen at close of trading in Tokyo today. It has declined 19 percent this year, compared with a 4 percent drop for the Bloomberg Asia-Pacific Airlines Index (BPRAIRL), which tracks 17 stocks.
ANA’s passenger traffic on both North American and European routes rose 14 percent from a year earlier in October. That helped offset a slump in Asian travel mainly caused by a territorial dispute with China. Total international traffic rose 5.8 percent.
The airline expects to increase profit and sales this fiscal year helped by the ventures, cost cuts and a travel rebound following Japan’s nuclear crisis last year.
Net income will rise 42 percent to 40 billion yen, while sales are expected to climb 4.1 percent to 1.47 trillion yen, according to the company’s forecasts.
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