BY Kai-Chin Shih / 27 MARCH 2014/ TOKYOJAPAN/ talkairlines.wordpress.com
On 27 March 2014, ANA Holdings Inc. announced on its official website a record 1700 billion Yen (16.7 billion USD) order for 70 new aircraft, the same day JAL subsidiary JTA (Japan Transocean Air) announced its order for 12 737-800NG (737 MAX Convertable). This is the largest order ever placed by ANA both in terms of value and number of aircraft. The order includes 40 Boeing aircraft (20 777-9X, 6 777-300ER, 14 787-9) and 30 Airbus aircraft (7 A320neo, 23 A321neo), boosting the ANA fleet to 250 jets. Delivery will be between 2016 and 2027.
This order marks a success for Boeing in Japan after losing Japan Airlines-JAL’s 31 wide-body deal to Airbus. Boeing has been enjoying a dominance in the Japanese airline business since decades ago. Japan Airlines currently operates an all-Boeing fleet, while Boeing planes make up over 90% of ANA’s current fleet. Almost all Japanese wide-body planes and over half of the narrow-body planes are made by Boeing.
Due to the earlier JAL A350XWB order, many are still predicting ANA ordering the A350. However, after the newest order of 40 long-haul wide-body Boeing aircraft, >talkairlines highly doubts ANA ordering Airbus wide-bodies. ANA’s long-haul wide-body order consists of 82 Boeing planes. Some 787s are to be replacements of 777-200 and older 767 while others are likely ordered for expansion. The 6 777-300ERs are ordered for pure expansion purposes before the arrival of the 777-9X. >talkairlines believes that even though ANA is rapidly expanding its international network, current orders are already enough for appropriate expansions and more planes may only result in over-capacity. Also, since the company stated earlier that it was deciding between 777X and A350, now both the Airbus and Boeing orders are released, it decreases the possibility of an A350 order in the next few years.
Despite the success of Boeing wide-body-wise, the order also marks the decline of the airplane manufacturer’s market share in the Japanese narrow-body market. The company’s share has already been declining after the rise of Japanese Low Cost Carriers. (The Airbus A320 is the most used aircraft type in the LCC business worldwide. Japanese LCCs including Jetstar Japan, Peach, and Vanilla Air all operate pure-A320 fleets.) The ANA A320-family order is definitely going to further impact Boeing’s 737MAX sales.
ANA’s narrow-body fleet consists of 61 aircraft (+3 orders), in which about 70% are Boeing 737s. The Airbus planes of the fleet are slowly aging with an average age of 19 years (According to Airfleets.com). Speculators agree that the airlines is in great need of replacing the aircraft, however, not many predicted the A320neo order coming. The new Airbus will be replacements of current A320s. Though the A320s are not likely to replace all 737s since many of them are still extremely new (3 to be delivered in 2014), there is a possibility of ANA attempting to operate an all-Airbus narrow-body fleet in the future. (>talkairlines believes that it is possible for ANA to operate all-Boeing WB (wide-body) and all-Airbus NB (narrow-body) while JAL operates all-Airbus WB and all-Boeing NB) Also, >talkairlines believes that besides expansion, the A320 order may also be for Vanilla Air, the group’s LCC subsidiary. Finally, solely regarding the A321 neo, >talkairlines thinks that the aircraft type may also become the 767 replacement and a new option for the company between the A320 and the 787-8. Besides operating domestically, it may also be used on international routes with smaller markets. Current ANA narrow-body international fleet is rather limited comparing to other Asian carriers.
Over the past few years, ANA is aggressively trying to increase its international capacity to make its international network surpass the size of its domestic network and to become the airline with the most international operations in Japan. According to CAPA Center for Aviation, ANA’s current international-domestic balance is about 4-6. Various statistics shows that domestic yields have been growing much slower than international yields, showing the necessity of creating a international-domestic balance. Orders of long haul planes and the recent achievement of becoming a Skytrax 5-star airline will help ANA achieve its goal in expanding international operations.