ANA Holdings’ purchase of Nippon Cargo Airlines finally looks like it will go ahead after Chinese competition regulators approved the deal. Chinese state media reported on July 1st that the regulator’s social media account had “announced that it has conditionally approved All Nippon Airways Co (ANA)’s acquisition of equity in Nippon Cargo Airlines” despite finding that “ANA and Nippon Cargo Airlines hold a relatively high combined market share in the China-Japan air cargo service market, and the transaction could adversely affect competition on the air cargo routes between the two countries”. The Chinese regulator sought assurances from ANA that they would sustain open access of ground handling operations to “new entrants”.
Reports vary on the date of the merger being finalised, with July or August being possibilities. ANA Holdings does not seem to have made a statement on this.
The attempt by ANA to buy Nippon Cargo Airlines started in 2023, when NYK, which owns Nippon Cargo Airlines, agreed to the sale. NYK had bought Nippon Cargo Airlines from ANA Holdings over the period between 2005 to 2010. However, the dedicated cargo operation often struggled to make money before market conditions changed so violently in 2020. NYK now reports that profits more than trebled in 2024 compared to the previous year, to Y19bn (US$132m).
It is unclear if the deal was driven by NYK’s keenness to sell what has been a volatile business that no longer fits so well in its portfolio, or ANA’s wish to strengthen its presence in the cargo market. ANA has benefitted from the passenger and cargo boom over the past three years and its profitability has improved. This seems to have spurred ANA’s senior management to re-focus on freight, including growing beyond the core North Asia routes and into regions such as South East Asia. Buying the larger freighters of Nippon Cargo Airlines’ fleet may strengthen ANA’s presence on higher volume, longer distance routes. However, the enlarged market-share on routes out of Japan may also improve profitability.
Japan now joins South Korea in seeing consolidation in the air freight market in North Asia, with the South Korean market seeing the purchase of Asiana Airlines’ freight business by Air Incheon earlier in the year.
Author: Thomas Cullen
Source: Ti Insight
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