Low-cost carrier AirAsia Japan Co. has begun taking steps to cease its operations.
AirAsia Japan had notified related organizations of the policy by Tuesday. Sluggish travel demand following the spread of the new coronavirus is believed to be responsible for the decision.
The company was established in 2014 with investments from parties including Malaysia-based AirAsia, the largest LCC in Asia. It started operations in 2017, and currently operates four routes connecting Chubu Centrair International Airport in Tokoname, Aichi Prefecture, where it is based, with New Chitose Airport in Hokkaido, Fukuoka Airport, Sendai International Airport and Taoyuan International Airport in Taipei.
The company suspended operations on all routes in the spring as the novel coronavirus spread. It resumed flying in August, but the number of passengers remained low.
AirAsia Japan invited its workers to apply for voluntary retirement, and 70 of about 300 employees did so. The company took additional streamlining steps as well, but is believed to have deemed it difficult to continue operating.
Because of their low fares, LCCs are said to quickly fall into the red when boarding rates drop. In addition, their financial base is often weaker than that of major airlines.
More LCCs may experience financial difficulties if a recovery in demand for air travel is delayed.
Source: The Japan News