Sept 9, 2013

Spring Airlines Japan to expand fleet to 20 aircrafts by 2017

Spring Airlines Japan, the Japanese subsidiary of the Chinese low-cost carrier China Spring Airlines (CQH), filed an application with Japan's Ministry of Land, Infrastructure, Transport and Tourism (MLIT) on September 5 seeking permission to operate flights in the Narita-Takamatsu, Narita-Hiroshima and Narita-Saga routes by the end of May 2013 with two flights per day. The company will deploy a Boeing 737-800 aircraft for the flights. At the press briefing held on the same day, Wang Wei , chairman (Right person in the photo), Hiroshi Ugai, president(Center person) , and Minoru Uchida, executive director of the company (Left person), were in attendance, providing explanations on such matters as the future business development plans of Spring Airlines Japan.

Spring Airlines Japan was established in September 2012. At present, CQH holds a 33% stake in the company, with the remaining 67% stake owned by Japanese-affiliated companies, including IT companies, trading houses and funds. It is currently capitalized at Y1.5 billion, but it plans to increase that to Y6 billion once the approval to operate is obtained. The company has 198 employees (119 at the head office, 77 at the Narita Operation Center and two at the Nogedaira warehouse), with roughly 90% of the workforce made up of Japanese nationality. It is targeting single-year surpluses (toward surpluses on the second year) on an operating gain/loss basis.

The airline will have three aircrafts in its fleet by May next year. It took in its first 737-800 plane from the aircraft leasing company AWAS last April, with the second plane expected to be received in/after December. In/after next year, the company plans to boost its fleet by five planes per annum from 2015 through 2017 toward a 20-plane strong fleet by 2017. It will lease the aircrafts from AWAS, as well as GECAS. The aircrafts owned by Spring Airlines Japan are all slated to be under operating lease contracts. The airline will mainly introduce the 737-800 aircrafts for now, but it has not yet definitely decided on the types of aircrafts that it will lease in the future. It is possible that the company will lease the MAX model of the same aircraft or bigger planes in the long run. With a schedule that leaves considerable room for aircraft operation, the company intends to boost its operation bases in the future as well.

Spring Airlines Japan is based in Narita, capitalizing on the city's geographical position that is close to the capital and its rich network of international routes. Haneda has restrictions on arrival/departure slots, so with the time needed in making the necessary adjustments, the company chose not to turn it into its base. With the growth in the number of aircrafts used, it projects that it would become difficult to operate with just its Narita hub in the future. So in the long term, it is probable that the airline will put a second and third domestic hub.

Takamatsu and Saga, where Spring Airlines Japan will operate, will be the departure/arrival points of its Shanghai flights, while Hiroshima will be its main airport for the flights in the Chugoku region. Takamatsu, Saga and Hiroshima have been chosen as its gateways for the Chugoku, Shikoku and Kyushu regions, respectively. Spring Airlines Japan plans to continue to put emphasis on local flights in the future toward the expansion of its routes in the country. The design of its flight routes is done for the whole CQH Group.

With regard to the commissioning of international routes, Spring Airlines Japan plans to expand from the Japan-China route network, but it has also incorporated in its expansion plan the commissioning of flights to Taiwan and Singapore depending on the demand. Now there are no plans to have the Japan flights operated by CQH taken over by its Japanese unit.

As for cargoes, the airlines is not eyeing making a foray into this segment for the time being, judging that it would be impossible to do so with the 737 aircrafts that cannot load containers. It has hinted, however, the possibility of engaging in the cargo business if it rolls out larger aircrafts in the future.

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