March 27, 2014 8:18 am

ANA $16.6bn aircraft deal loosens Boeing’s grip on Japan market

A Boeing 787 Dreamliner©Getty

A Boeing 787 Dreamliner

Boeing’s dominance of the Japanese market has hit further turbulence after rival Airbus split a Y1.7tn ($16.6bn) order by All Nippon Airways for 70 new aircraft.

Although the US aircraft maker won 40 of the 70 orders, the move marks another step forward by Europe’s Airbus in the Japanese passenger jet market – one traditionally controlled by Boeing with an 80 per cent share.

The order by ANA to renew its ageing fleet – its biggest purchase to date – includes 14 Dreamliners, Boeing’s newest and most sophisticated passenger jet, but one that has been plagued by setbacks.

Last year, the worldwide fleet of 787s was temporarily grounded after batteries overheated on two Dreamliners, and in October the US manufacturer was dealt a further blow when Japan Airlines signed an agreement to buy 31 Airbus A350s worth $9.5bn at list prices, along with options for another 25.

Airlines are increasingly using a mixture of Airbus and Boeing for their long-haul jets, rather than sticking with a sole manufacturer.

Airbus has set a target of doubling its market share in Japan from 13 per cent to 25 per cent by 2020. Its long-term goal is 50 per cent, in line with its targets for the rest of the world.

As well as ANA and JAL, Airbus is eyeing Japan’s burgeoning low-cost carrier airlines, and said it had already secured orders from Skymark Airlines.

But Boeing’s share will not be taken easily. The Seattle-based company has had a strong grip on Japan since the end of the second world war, when domestic manufacturers – banned from making their own aircraft by occupying forces – turned into suppliers.

Now, the so-called “Heavies” – Mitsubishi, Kawasaki and Fuji – make big chunks of Boeing aircraft sold all over the world. The US company says it will spend about $5bn this year on procurement in Japan, helping to sustain 22,000 jobs, or almost half the country’s aerospace industry workforce.

FT Video

The wide-body war

Airbus A350

June 2013: Airbus is pushing Boeing for market leadership in the twin-engined aircraft market. Andrew Parker reports on why a price war might be in the offing – which would be bad news for the two manufacturers, but good for airlines.

In the latest deal, notwithstanding the near 50:50 split between the manufacturers in aircraft numbers, ANA’s order from Boeing is by far the more lucrative based on catalogue prices, coming in at Y1.36tn, while Airbus’s deal is worth Y360bn.

ANA’s order with Airbus consists of smaller single-aisle A320 jets and will see the aircraft delivered between 2016 and 2027. The deal will increase the size of the ANA fleet to 250 aircraft, including retirements.

Shinichiro Ito, ANA president, said the prospect of the Tokyo 2020 Olympics was another factor in updating the airline’s fleet.

“These new aircraft will give us maximum flexibility and improved fuel efficiency and will allow us to meet the growth in demand, both internationally and in our domestic Japanese market.”

The Japanese government wants to boost annual foreign visitor numbers to 20m by 2020. They recently surpassed 10m as more tourists returned to the country after the March 2011 earthquake and tsunami deterred many potential holidaymakers.

Additional reporting by Jonathan Soble

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