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The head of ANA Holdings Inc, which recently announced the planned merger of its two affiliated low-cost carriers, says the budget airline will increase flights from local Japanese cities to Asian countries.

In an interview with Kyodo News, ANA Chief Executive Officer Shinya Katanozaka said China and the Philippines are possible destinations for additional short-distance flights while Guam could become a new market.

"What I especially expect from our LCC business is to fly overseas from local cities," Katanozaka said. "Major carriers have mostly pulled out of international flights from local areas…But we are seeing foreign LCCs in those areas and there are chances for Japanese LCCs too."

Last month, ANA Holdings announced that it will merge its affiliated low-cost carriers Peach Aviation Ltd. and Vanilla Air Inc. in an effort to boost its presence in the Asian market amid intensifying competition with rival budget carriers.

Katanozaka said the merger decision was made as now was "the best timing given the two companies' strong profits and the surging number of foreign visitors to Japan."

Full integration will start in the second half of fiscal 2018 and be completed by the end of fiscal 2019, with Peach Aviation remaining as the surviving company.

The final decision on which short-distance international routes the budget carrier will expand service or begin flying will be left with the carrier, Katanozaka said. Regarding intermediate distance flights likely to start by around 2020, the company is likely to fly to resort areas in addition to Singapore and Bangkok.

Katanozaka said one major airport in Asia had already offered to let Peach begin flying there. "That is how much the (Peach) brand has become famous," the CEO said.

The combined revenue of the two budget carriers surpasses that of the country's top budget carrier Jetstar Japan Co. Peach Aviation is eyeing around 150 billion yen ($1.4 billion) in revenue and some 15 billion yen in operating profit in fiscal 2020.

Peach plans to increase the number of routes the two merging airlines now fly from 39, to more than 50 after 2020, including both domestic and international flights.

© KYODO

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