This study examines air service development in Japanese regional airports from the theoretical viewpoints of destination management, transaction cost, and value-chain. Japanese regional governments actively engage in air service development to attract new international routes and new foreign entrants in their local airports, leading to the following effects. First, the active engagement builds the mutual credibility and long-term relationship, reducing the transaction cost. Second, by collaborating with and coordinating with many players and stakeholders such as local governments, councils, travel agencies, DMOs, and JNTO, it is possible to provide more effective information as a whole region or across regions, leading to internalization of external effects. Third, such collaboration and coordination make it possible to offer high-value added travel product such as wide-area product covering multiple regions and using different airports and more local-oriented travel product, contributing to reduction of information asymmetry about tourism between foreign airlines and local airports.
