Posted September 30, 2011 5:05 AM
By Fay Sanders
Spring Airlines on hunt for JV partner and first five narrowbodies
Spring Airlines, the low-cost carrier (LCC) airline subsidiary of Shanghai Spring International Travel Service, is on the lookout for a joint venture partner to set up a locally based budget airline entity.
The group is also scouting for Spring Japan’s first five narrowbody aircraft, which will be financed through operating leases. “We are still deciding whether to go for Boeing 737s or Airbus A320s,” Spring’s recently-appointed CFO Johnny Lau told Aviation Exchange.
Japanese law states that any new airline wishing to establish a local business needs to be majority-owned by a domestic player. “Although we are legally required to find a Japanese partner, we also want to benefit from synergies such as shared relationship networks, assets, expertise and money,” Lau said.
Spring is in talks with a number of Japanese companies with a view to forming an alliance, “Japan’s aviation market is well-established and we have plenty of choice from banks, airports, trading houses, leasing companies and players on the supply side.”
Spring Japan is poised to launch in 2013; a year after LCC heavyweights Jetstar and AirAsia will have already set up shop in Japan with their own locally-based, budget start-ups.
However, Lau, who joined the group from ICBC Leasing last month, is unperturbed by the raft of LCC newcomers hitting the Japanese market. He dismissed remarks made by Jetstar executive director Vincent Hodder on day two of Ascend’s Aviation Finance Forum in Tokyo yesterday that “only the first one or two market entrants will get scale and the others will fall by the wayside.”
“Japan has huge market potential,” said Lau, who remains confident that the amount of business Spring is already bringing from China to Japan through its travel agent parent company, will help guarantee the success of Spring Japan. Spring has regular flights from Shanghai to Japan's Ibaraki Airport.
Furthermore, it is unlikely that Spring will team up with a local airline, according to Lau, who is mindful about potential route conflicts. Jetstar Japan and AirAsia Japan, on the other hand, have chosen to partner with Japan Airlines (JAL) and All Nippon Airways (ANA), respectively. ANA also announced it is setting up its own budget airline, Peach Aviation, which is also due to begin service next year.
Spring is China’s only LCC and operates 25 Airbus A320s with an average life of 4.4 years. It is planning to IPO on the Shanghai Stock Exchange next year.
By Fay Sanders