(Updates with Chinese ships’ movement in seventh paragraph.)
Feb. 4 (Bloomberg) -- Spring Airlines Co., China’s biggest carrier outside government control, is considering ending flights to Japan after a territorial dispute between the Asian countries last year emptied planes and caused losses.
Spring hasn’t decided on the 12 weekly flights between China and Japan, Chairman Wang Zhenghua said in an interview in Singapore, adding his “Japanese friends” are asking him to continue. Shanghai-based Spring has put on hold plans to add more Japan services as it’s filling less than 50 percent of the seats on those flights, compared with an average 92 percent occupancy on other sectors.
While Japan is only 2 percent of the airline’s capacity, the Chinese carrier had planned to make the nation as its biggest overseas hub, Wang said. The closely held airline was relying on setting up foreign bases in Hong Kong and South Korea to fuel its expansion amid competition with three large, government-controlled carriers in the domestic market.
“We’ve never had such empty flights in Spring’s history,” Wang said Feb. 1. “The political limbo is giving us a tough time, as we don’t know when the market can recover. I hope the tensions can be eased as soon as possible.”
The decades-long territorial dispute, involving a group of islands called Senkaku in Japan and Diaoyu in China, was reignited in April, when then-Tokyo Governor Shintaro Ishihara, a longtime critic of China, proposed buying the territories. That led former Prime Minister Yoshihiko Noda’s administration to purchase the islets in September, escalating tensions between the two nations and sparking violent protests across China.
That led to a plunge in sales for Japanese carmakers Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. While the carmakers have yet to fully recover, the sales decline have since eased.
Two Chinese maritime surveillance vessels entered Japan’s waters around the disputed islands this morning, Kyodo reported today, citing Japan’s Coast Guard. Japanese Prime Minister Shinzo Abe said last week stationing officials on the islands remains an option.
All Nippon Airways Co., Japan’s largest airline, had 46,000 seat cancellations on flights between September and November because of the dispute, the carrier said last month. ANA had then forecast the row will cut sales by about 10 billion yen.
Fearing attacks from anti-Japan protesters, Fast Retailing Co., seller of the Uniqlo casual wear brand, temporarily shut 60 of its 169 stores in China from Sept. 14-24, according to spokeswoman Yukie Sakaguchi.
Sino-Japan tension is the biggest worry for Spring Air’s overseas expansion, Wang said. The carrier started flights to Japan in 2010 and flies to three destinations in the country -- Ibaraki, Fukuoka and Takamatsu.
A new route, between Shanghai and Osaka, was approved by the Japanese authorities and was due to start last year. That plan has now been suspended, Wang said.
--Editors: Anand Krishnamoorthy, Vipin V. Nair