A geographical and operational manifestation of this innovative way of thinking is ANA Cargo’s hub in Naha, on the island of Okinawa, in the far-southwestern outreaches of the Japanese archipelago. By opening the Naha hub in 2009, the carrier effectively shifted its focus away from its home market to become a regional and global business.
Okinawa was chosen not for its negligible local cargo business but for its relative proximity to major Asian markets. According to ANA, 2 billion people live within a four-hour flying radius of Naha, as well as other major hubs such as Singapore, Bangkok, Hong Kong, Guangzhou, Shanghai and Seoul – and of course Tokyo.
Pushing further afield, the carrier is planning to continue this strategy with a regional hub for Southeast Asia, ANA Holdings president Shinya Katanozaka revealed last year. The parent airline further underscored its international ambitions in January with the announcement of plans to acquire an 8.8 percent stake in Vietnam Airlines. According to a company spokesman, however, there are no plans to develop cooperation with Vietnam Airlines on the cargo side at this point.
Tomoyasu Fukuyama, president of forwarder Logi-Rex, said he agrees with ANA’s basic philosophy, pointing to the fact that many manufacturers have shifted their production from Japan to other locations in Asia. His parent company, logistics firm Hamakyu-Rex, is also looking to expand overseas, he said.
The company has trained its sights on China, but Vietnam has also gained prominence, mostly on the back of consulting work for Japanese clients. If this momentum continues, the company may set up a logistics center in Vietnam, Fukuyama says.
The success of the Okinawa move has led to an overhaul of ANA Cargo’s fleet, which grew by two 767-300Fs to stand at 12 freighters today. In November 2015, ANA CEO Osamu Shinobe indicated that the carrier could convert more of its 767 passenger planes into all-cargo configuration, adding that management prefers to convert existing aircraft to freighters, rather than buy new models like the 777F, to keep costs down.
A fleet expansion would be in line with ANA Cargo’s stated goal (outlined in a five-year forecast published in February) to boost its airfreight capacity by the end of fiscal year 2020 to 138 percent of the current period’s level and climb in the global cargo carrier rankings from number eight last year into the top five. By fiscal 2017, management aims to achieve profitability in the freighter business, the forecast indicated.
Strength in numbers
ANA’s strategy doesn’t end with the formation of a new hub. It’s also expanding its global footprint buy building relationships with its competitors. Today, the carrier is pursuing Asian cargo outside its home market largely through its cargo alliances with Lufthansa and United Airlines, a strategy that also helped expand its reach to Europe and the Americas. The joint venture with Lufthansa is now well established, according to the two carriers, while the ANA-United JV is expected to take off this summer, ANA has signaled.
The tie-in marks a strategic shift for its U.S. partner as well. United has been one of the U.S.-based carriers with grandfathered fifth freedom traffic rights in Japan. What used to be a highly coveted asset has lost much of its appeal in recent years, which is reflected in the dismantling of United’s intra-Asian network. In June, United will terminate its Narita-Singapore flight and start a direct Singapore-San Francisco route instead. “We need to compete with the local flag carriers,” said United’s Sato. “The value of our intra-Asia network is getting less and less.”
To compensate for the loss of cargo flows from the region feeding into United’s trans-Pacific departures from Narita the airline is looking to its planned joint venture with ANA. The Japanese carrier can connect intra-Asian flows with United’s flights across the Pacific, Sato said. “ANA are a good match with the network. They have a great network intra-Asia, United has a good network in the Pacific,” he added.