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Japan's second-largest airline has announced it is to launch two new low-cost airlines in 2007 to compete with a boom in the number of budget airlines, the Yomiuri Shimbun daily has reported.

All Nippon Airways (ANA) said that the two new carriers, one of which will be for domestic and the other for international services, would help it to compete with other budget carriers at Tokyo's Haneda Airport, which is due for expansion with the completion of the construction of a new runway in 2009.

Following completion of the new runway the number of flights is expected to increase by as much as 40%, including short-distance international flights, the report said.

As a result, ANA said that it is moving further into the low-cost carrier market to take advantage of booming demand.

The Yomiuri Shimbun quoted ANA sources claiming that the new subsidiaries would offer a reduced in-flight service to fund lower ticket prices.

The sources added that it is not yet clear whether ANA will reorganise its five current subsidiaries or establish entirely new companies to accommodate the new carriers.


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