Japan Airlines Co. is examining setting up a new low-fare carrier to increase capacity and take on rising competition from budget operators in Asia’s second-largest economy.

Starting a discount airline is part of the carrier’s need to widen its product line-up, Vice Chairman Junko Okawa, 63, said in an interview in Singapore on Monday. It is one of several options the company is exploring, she said, adding no decision has been taken yet. Known as JAL, the airline is already a shareholder in low-fare carrier Jetstar Japan Co.

Asia’s budget airline revolution has been slow to sweep Japan, a market that JAL and its bigger rival ANA Holdings Inc. have dominated for decades. Aided by a tourism boom, low-fare carriers such as AirAsia Bhd., Jetstar Japan and Peach Aviation Ltd. have in recent years tried to wean passengers away from legacy operators in a country where the Shinkansen bullet trains offer stiff competition to planes on internal routes.

Foreign visitors to Japan rose 19 percent last year to a record 28.7 million, according to Japan National Tourism Organization. The tourists were mainly from China, South Korea and Taiwan.

According to the airline’s medium-term plan, JAL is aiming to get 50 percent of its revenue from international passengers by 2020, up from 30 percent last year, Okawa said.

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Photo Credit: Japan Airlines may start its own low-fare airline. Pictured is one of the carrier's Boeing 787s. Reuters / Toru Hanai