Japan Airlines eyes move into budget market

Japan Airlines may team up with Australia's Jetstar group to enter the budget airline market in a move that could ignite airfare battles in Japan, a country known for its expensive airports and services.

Budget airlines have been on the increase throughout the world, but Japan has always been a difficult market to crack owing to high labour costs, limited slot availability at key airports and high landing fees.

Several overseas budget carriers, including AirAsia, kicked off regular flights to Japan after an "open skies" pact in late 2010 liberalised civil aviation markets, creating a new demand mostly among young travellers.