Issue 2 • April 2012

IN THIS ISSUEJapan’s Fuji Dream Airlines

WHEN OppOrTUNITy KNOcKS

Getting off

More Doors

FDA ANSWERS THE DOOR

the Ground

Opened

When is the best time to start a new airline? If you are Yohei Suzuki, the President and CEO of Suzuyo, Japan’s leading air and ocean logistics company, the ideal time is when you see an opportunity that no one is seizing; even it is just three months before the collapse of the world’s financial markets and a global economic downturn.

Fuji Dream Airlines was born from Mr. Suzuki’s belief that he could offer an alternative to a travelling public that wanted to fly more conveniently to cities across Japan from Shizuoka, Suzuyo’s home town, as soon as a brand new passenger airport was to be opened there in 2009. For that idea to work, FDA needed a fleet of small airplanes to accommodate the lower demand expected from a secondary market like Shizuoka. Big aircraft carried the risk of empty seats and high operating cost, two things that ran counter to FDA’s business philosophy of growing its business in carefully controlled capacity increments.

Four years later, a fleet of six, rainbow-coloured E170 and E175 E-Jets take off 280 times per week to ten cities in Japan, carrying nearly fifty thousand passengers per month. It is a success story as understated as the airline itself yet consistent with the careful management and entrepreneurship of a parent company that has prospered for more than two hundred years.

Further restructuring also saw JAL exit the lucrative Nagoya Komaki – Fukuoka route and seek a code-sharing partner to maintain its presence. The carrier had flown from Nagoya’s coveted Komaki airport just 20 km from the city but consolidated all operations at the new Centrair Airport

In July 2009, with its two-letter JH designator and operating certificates in hand, the first FDA E-Jet, a red 76-seat E170, took off for Komatsu from the new Mt. Fuji Shizuoka Airport, just 80 km from the iconic cone-shaped mountain. It was a flight that was to be the first of many operating in a true point-to-point business model with an aircraft configured with the right number of seats for the planned network. The airline was following its business philosophy of developing a local route system, carefully avoiding the country’s most competitive routes.

Opportunity unexpectedly knocked on FDA’s door when Japan Airlines began restructuring and initiated a series of domestic route changes in 2010. As it reduced frequencies and withdrew its own flying from some markets, JAL explored options to keep its route presence, including code-sharing with FDA between Shizuoka-Sapporo and Shizuoka-Fukuoka. FDA agreed to use the JL code on those city pairs and in the same year, FDA flights also carried the JL

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FDA’s E-Jets turnaround in as few as 25 minutes.

designator on services between Matsumoto-Sapporo and Matsumoto-Shizuoka. Virtually overnight, FDA’s unique business model had changed to one that now included code-sharing and a new sales distribution channel. By the end of 2010, FDA was filling 50% of the seats and had transported nearly 300,000 passengers on a fleet of five E-Jets flying to Kagoshima, Kumamoto, Fukuoka, Komatsu, Sapporo, Matsumoto and Nagoya’s Komaki Airport.

some 40 km south. JAL also closed its Komaki hangar which was acquired by FDA and where the airline performs E-Jets line maintenance. FDA has been steadily increasing flights between Komaki and Fukuoka to the point where the route is now the airline’s highest passenger volume city pair.

The network expanded in 2011 with new flights between Nagoya-Komaki and Kumamoto in 2011. The growth has nearly doubled the carrier’s overall network enplanements year over year. The 2011 figure was 550,000 passengers who collectively helped to fill an average of 61% of available seats.

By the NumbersToday, FDA no longer exhibits the characteristics of a start-up airline. There is one more E-Jet in the fleet, an 84-seat E175. Last year, the three E170s and three 175s each flew an average of 8.3 hours per day and 177 cycles per month with 99.6% dispatch reliability and completion rates often reaching 100%. That utilization was achieved with a highly-efficient schedule in which ground time between flights is just 25 or 30 minutes. Because of Japan’s rather compact geography, the average FDA flight is about 93 minutes although Chitose-Shizuoka, the carrier’s longest, is just over two hours.

April 2012 3

Passenger volume is growing. Network enplanements doubled from the previous year to 550,000 in 2011.

FDA’s E170s have 76 seats in single class configuration. At the end of 2010, there were ten cities in the FDA network.

4

FDA to the Rescue

Big Dreams

The devastating magnitude 9.0 earthquake and subsequent tsunami that struck the Tohoku area at 2:46 pm on March 11, 2011 paralyzed rail and road lines in the region. Surrounding airports were able to support a relief effort to receive food and rescue personnel and equipment. FDA pressed its E-Jets into emergency service and carried medical teams and relief supplies to Iwate-Hanamaki airport, the closest airport to the stricken coast.

FDA plans to add more frequencies and pursue its objective to offer greater connectivity between secondary cities. But as opportunities arise, the airline will maintain a disciplined approach to adding capacity, mindful of the cost of empty seats and the volatility of demand in an unpredictable domestic market. FDA has thrived where others have failed and survived both economic and natural catastrophes.

Mr. Suzuki had a dream that one day he would have an airline carrying passengers around the country on airplanes that hold the symbols of his beloved Mt. Fuji. His dream takes off more than 40 times every day in shades of red, blue, pink, orange, green and purple.

From May to July last year, FDA adjusted its flight schedule to accommodate the steady demand for cargo and passenger charter capacity to Hanamaki and the neighbouring city of Aomori to support the rescue effort. With load factors on those routes nearing 65%, FDA decided to make the flights permanent and by August had added the cities to its scheduled network.

FDA’s E-Jets carried food supplies, equipment and rescue personnel for the earthquake and tsunami relief effort. Mr. Suzuki (center), FDA’s CEO, personally helped unload cargo from the special charter flights.

FDA’s E175s have 84 seats in single class configuration.