Japanese regional operators Air Do and Solaseed Air will merge by 2022, in what appears to be the first signs of consolidation in the country’s airline market in recent years. Both carriers on 31 May inked an agreement to set up a joint holding company, with the consolidation targeted to be completed by October 2022. In the interim, a “business alliance” between both parties has been established. It appears that the two carriers will continue to retain their distinct brands post-merger. However, both Solaseed and Air Do will aim to further reduce costs by standardising operations and streamline their organisation structure.
The merger comes amid an unprecedented collapse in travel demand from the coronavirus pandemic, consequently impacting their profitability. Sapporo-based Air Do plunged to a net loss of Y12.2 billion ($111 million) for the year ended 31 March, as the number of passengers carried in the year nosedived 72% year on year. Miyazaki-based Solaseed, meanwhile, reported a net loss of Y7.6 billion for the year. In order to quickly recover the damaged financial base of both companies, survive the new business environment, provide more added value to customers, and achieve sustainable growth the cooperative relationships between the two companies will be further deepened. Both carriers also warned that it will “take some time” before they would be able to return to pre-pandemic profitability.