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Mar. 10, 2015 - Updated 04:16 UTC



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Ready for Boarding

Apr. 8, 2015

Budget airlines have transformed the aviation industry over the last decade. There's one market that's proven hard to crack and that is Japan. But that is changing. Narita Airport has opened a new terminal exclusively for low-cost carriers and more people are finally betting on budget travel.

"Bright, spacious, but simple" are the words to describe Narita's new Terminal 3. On its first day of business, low-cost flights were already drawing passengers.

Five budget airlines from Japan, Australia, and Korea have established bases at the terminal. They link Narita with 12 cities in Japan and 7 abroad, including Melbourne and Taipei.

The number of international and domestic LCC flights at Narita has more than doubled in two years. That led airport authorities to invest in a dedicated terminal to handle all the traffic.

Japan has been a slow starter in the low-cost carrier business, the airport set out to make the terminal as inviting as possible. Functionality was the main objective.

The girders are not covered with ceiling panels. Instead the beams, walls and pillars are covered with covered with large signs that are hard to miss.

Visual communication is also on the floor. Pathways are marked in two colors. Blue is for departing passengers. Red is for those arriving. Passengers just need to follow the line, and they won't get lost.

The user-friendly attitude extends all the way to the planes. Apron roofs ensure passengers won't have to worry about rain and wind. That's not always the case with budget terminals at other airports.

The terminal also has the largest airport food court in Japan, with seating for 400 people. Japanese food including sushi, udon noodles and okonomiyaki can be tried before boarding.

There are also sofas, were passengers can rest. Being a latecomer to the LCC business allowed Narita to benefit from the experience of similar terminals around the world.

We asked a few travelers for their impressions. "Well, I mean if you stick to the track, you know where you're going," said one man. A woman remarked that "it was very easy to find from the train. It's very well indicated, the walk was not very far and everything goes very smooth!"

Narita is expecting around 5-and-a-half million passengers to come through the facility in its first year. If that happens, the LCC business may prove to be the flight path for expansion of Japan's aviation industry.

Beppu: Narita's operators see low-cost carriers as the best way to grow their business. NHK WORLD's Daisuke Azuma, who has been tracking the rise of the budget airline industry, joins us. Daisuke, how are these carriers performing worldwide?

Azuma: Globally, they're soaring. They're offering much cheaper tickets. Some are undercutting full-service carriers by more than 50%.

Take the market share for low-cost carriers back in 2004. They had less than 25% in every region. A decade later, they had captured 42 % of the market in Europe, and more than 50% in Southeast Asia. But in Japan, they were stuck at 6.2 %.

Shibuya: Why do you think that is?

Azuma: One of the reasons is that Japan has such an efficient rail network, including the bullet trains. Consumers here don't have such a positive view of budget flights. A lot of people still think a cheap fare means poor quality.

And finally, the government made it unusually difficult for airlines to open new routes. The regulations were a big hurdle.

Beppu: So what's changed? Why are people optimistic about budget air travel now?

Azuma: First of all, more tourists are flying to Japan. The government has relaxed some of its visa regulations, and it's now much easier for people from China and Southeast Asia to visit. Many of them want to fly in as cheaply as possible.

Secondly, the government has identified the low-cost carrier business as a growth market. Officials have been working hard to attract carriers to Japan.

Shibuya: How are overseas budget airlines seeing the Japanese market?

Azuma: They're enthusiastic. 18 companies now operate in Japan. Chinese airlines have been especially keen to set up subsidiaries here. They're quickly building a network of routes, bringing tourists to Japan and flying them around the country. And things are getting so competitive that the companies have to offer more than just cheap flights. I looked at what one new airline is doing to set itself apart.

Japan's newest no-frills carrier is Spring Airlines, which started operations in August last year. It flies 3 domestic routes that originate at Narita Airport.

The parent company based in Shanghai has put great emphasis on the Japanese market. One Japan-based passenger remarked "the tickets are so cheap you don't have to think too hard before you buy them."

The airline plans to start flights between Narita and mainland China sometime this year. The sharp rise in Chinese tourist numbers represents a major business opportunity. The challenge now is how to satisfy repeat customers.

Company executive Kunie Hasegawa visited Kyoto to speak with business people on ways to provide visitors with new experiences.

One person she spoke to is the manager of a kimono rental service. She asked whether people on group tours from China can enjoy walking in Kyoto while wearing Kimono. She found that the company had enough staff to help 100 tourists get dressed in under an hour.

Hasegawa also visited Miyazu City, about 60 kilometers north of Kyoto. It's known for a sandbar called "Ama-no-hashidate," meaning "heaven's bridge." The spot is known as one of the three most scenic views in Japan. But only 1% of foreign travelers to Kyoto manage to make it out to the area.

The city has another feature unfamiliar to foreign visitors: a cathedral reflecting both Japanese and Western culture. For example, the seating areas are covered by tatami mats. Built in the late 19th century, it's said to be the second-oldest Catholic church in Japan.

Hasegawa reported on her findings at a meeting with airline officials. For example, she estimated that tying up with the kimono rental service would help cut fees by 5 to 10%.

Company officials realized they need to provide information not available in guidebooks by putting it into their inflight magazine. They also found they need to improve ties with local business people in order to expand markets.

"We have to consider what customers do after taking a flight," says Wang Wei, chairman of Spring Airlines Japan. "That's the quality of service we are aiming for.

While the US and Europe have many years of experience with low-cost carriers, Japan has less than 4. But it's certain that the LCC market share in Japan will expand."

Shibuya: So these airlines have to do more than bring people here. They're trying to make sure people have a good time, and want to come back. Daisuke, what else do you think airlines need to do to survive in this tight market?

Azuma: They need to create a new generation of travelers. They know they can't just draw customers from full-service carriers. They're looking to attract younger travelers who don't have the prejudices that older generations do.

Beppu: You talked earlier about the perception that cheap tickets mean poor quality. How can the companies overcome that idea?

Azuma: Some people in the industry say the airlines need to focus on the basics. They have to secure enough staff so they can make sure they can fly when they say they'll fly. Many airlines have been canceling flights, leaving passengers stranded. The airlines need to prove they're reliable.

And they'll be put to the test this year. The government is predicting a record number of tourists. So competition in the low-cost airline market will be fiercer than ever.