In a research note today, OSK said Japan’s low-cost passenger segment was under-served, with its penetration rate at only 9.1%.
“AirAsia Japan’s planned destinations are among the top four domestic destinations in Japan, while on the international side, Seoul is in the top spot with Busan (also in South Korea) ranked somewhere between 10 and 15,” it said.
OSK said AirAsia would be competing head-on (in terms of routes operating from Narita airport) with Jetstar Japan, which was expected to commence operation a month earlier.
It said Jetstar’s presence would certainly add heat to the competition but the fact that penetration of low-cost travel in Japan was relatively low compared to other regions meant that the market was big enough for all.
AirAsia Japan last week received the air operator certificate (AOC) to start operations by Aug 1, 2012 from Narita airport to Sapporo, Fukuoka and Okinawa and to Seoul and Busan in October.
Meanwhile, OSK said it was optimistically cautious on AirAsia Inc, AirAsia’s Philippines associate.
It said the Philippines, an attractive market for low-cost carriers given the archipelagic nature of its geography, was conducive for air travel.
OSK said coupled with the high number of Filipinos working abroad as a boost to international travel, the Philippines offered significant growth potential given the propensity for air travel on the back of rising per capita income.
AirAsia Inc has received its AOC from the Civil Aviation Authority of the Philippines.
It is expected to commence flights as early as March or April 2012 to Singapore, Hong Kong and Macau.
OSK has maintained earnings and “buy” call on AirAsia with the fair value unchanged at RM4.57.