JAL plans budget carrier with Jetstar

Japan Airlines (JAL) is expected to enter the low-cost carrier market by teaming up with Australia's Jetstar, launching domestic services as early as next year, a report said Friday. JAL plans to set up a joint venture with Jetstar, the budget offshoot of Australian national carrier Qantas, for flights using Narita and other domestic airports, the Nikkei business daily said. The venture would be capitalised at 10-20 billion yen ($124-248 million), with JAL and Jetstar each taking stakes of about 30 percent, the daily said, adding that it would be later decided which firm has management control. Major Japanese trading house Mitsubishi and Toyota Tsusho, a trading firm affiliated with auto giant Toyota Motor, have been invited to invest, it said, adding that JAL and Jetstar aim to finalise a deal by the end of July. The carrier would start with domestic services with a plan to expand flights to international routes in the future, it said. JAL would not confirm the report. "Nothing has been decided" although the company is studying whether to enter the low-cost carrier market, a company spokesman said. JAL posted a record annual operating profit of 188.4 billion yen for the year ended in March, more than a year after its spectacular collapse prompted a government bailout. JAL went bust in January 2010 with debts of about 2.32 trillion yen -- one of Japan's biggest-ever corporate failures. The company continued flying during a rehabilitation process that included massive job and route cuts, while under court protection. But the Nikkei said its revenue and profit are sure to plunge this year as travel demand fell as a result of the March 11 earthquake and tsunami. JAL's rival, All Nippon Airways (ANA), is set to start Japan's first budget carrier, called Peach Aviation, with Hong Kong and Japanese investment funds. It aims to begin domestic services out of Kansai International Airport in the western Japanese city of Osaka in March 2012. Services between Kansai and Incheon airport in Seoul are due to begin by May 2012.