Jetstar scouts Japan

JETSTAR is believed to have shown interest in flying domestic routes in Japan after exploring opportunities to form a joint venture with local investors.

Jetstar and its Singapore affiliate, Jetstar Asia, already fly international routes from Australia and Singapore to Japan. But Japan's biggest newspaper, Yomiuri, has reported that Jetstar plans to raise funds from Japanese investors to form a joint venture to fly domestic routes.

Under foreign investment rules, Japan requires domestic airlines to have less than a third of foreign capital.

Although Japan presents enormous opportunities, any plan to enter the country's domestic market would be fraught with difficulties because it is regarded as a relatively closed market. The country's two major carriers, Japan Airlines and All Nippon, are also considering low-cost subsidiaries.

The main low-cost competitor on domestic routes in Japan is Skymark Airlines.

''I would have a crack at south-east Asian markets before I'd have a crack at Japan - it's really tough,'' an industry insider said yesterday. ''China would be the hardest, followed by Japan.''

Yomiuri reported that Jetstar and China's Spring Airlines had approached Japan's Transport Ministry to inform it of plans to fly domestically and seek approval.

A Jetstar spokesman said it was ''inappropriate to comment on unsourced information''. But he said the airline had a ''pan-Asian strategy which includes exploring opportunities across Asia''.

Jetstar has been talking up its intention to form other joint ventures in Asia to expand in the world's fastest-growing aviation market. The Philippines is seen as of interest to the airline.

Any joint venture in Japan is likely to be modelled on Jetstar Asia, the Singapore-based airline in which Qantas has a 49 per cent stake and Singaporean businessman Dennis Choo the rest.

Qantas also part-owns a stake in Vietnam's second-largest airline, Jetstar Pacific.

Macquarie Equities believes Qantas will cement a closer relationship with JAL before courting another Asian partner. Qantas has a code-share agreement with JAL between Australia and Japan.