Japan Travel Trade Weekly News
Keeping you abreast of what's going on in the
Japanese travel and tourism industries.
News consolidated by Travel Vision, Inc. updated every week.
JTB's Next President Tagawa Cites Community Exchange, Globalization,
Internet Business as Mainstays for Reinventing Company
Early-May 2008
JTB Corp. announced that it appointed Hiromi Tagawa, senior
managing director, as the next president of JTB. Takashi Sasaki,
president and CEO, becomes representative chairman and Ryuji
Funayama, now representative chairman, steps down to a
director-advisor. The decision is to be approved at the shareholders
meeting held at the end of June.
Mr. Tagawa said to the press on April 25, "JTB is capable to make
a further growth in terms of the group power and brand recognition.
Next year will be an important year for us because it is the first
year of our next medium-range management plan. I want to heighten our
staff's motivation that is the source of fulfillment of customer
satisfaction and employee satisfaction." He cited community exchange,
globalization, and Internet business as the fast-growing sector in
its business domain on which JTB's future growth rests.
Mr. Tagawa speaks of a tough situation in which travel agencies
are placed now but warns at the same time of the risks of following
conventional ways of business, saying, "It does not stand much of a
chance to produce merchandise routinely and distribute it in the
marketplace. We should be more specific in tailoring products to
customers needs. Travel industries are not sophisticated yet in this
regard, so we must exert ourselves to create demand on our own."
He is enthusiastic about reinforcing the management base of the
total JTB group as a follow-up of the company split-up. In reference
to demand creation, he is of the opinion that travel agencies should
take initiative in organizing tours, for instance, coupled with
charter flights from Haneda (Tokyo) Airport in a move to activate the
market although some risks are involved. Tour operation based on
charter flights could serve more or less to level off the uneven rate
of overseas travel population by prefectural unit. As a way to share
the risks of being a charterer alone, Mr. Tagawa proposes an idea to
set up a joint company with contribution from several agencies for
the single purpose of charter flight operation.
From the viewpoint of maintaining management stability, he argues
that agencies should make more business out of inbound travel from
Asia and offshore traffic between the third countries in
consideration of the Japanese market's vulnerability to foreign
factors. In case of JTB, it is stepping out aggressively into the
international market by, for example, establishing a holding company
in China and a subsidiary in Viet Nam, while incorporating inbound
business along with the Visit Japan Campaign (VJC) and outbound
business embraced in the Visit World Campaign (VWC) into the group's
management strategy.
With regard to the Internet-based business, Mr. Tagawa,
reflecting on his experience of having resided in the United States,
says, "I was confident that Internet would become a strong business
tool someday, but it does not necessarily lead to the conclusion that
JTB stores in Japan should be scrapped drastically now. We must find
a way to fuse Internet transactions and real stores' function
together."
He admits the Internet plays a significant role in people's
consumption behavior in the long view but it never happened at JTB
that the existing stores had dropped sales by 20 or 30 percent from
the previous year. Therefore, he would take time in deciding how to
shape the company for the future, probably by sometime in 2010 or
2011 when Haneda is remodeled to facilitate international traffic.
Until then, the company will continue to study the market situation
and make a necessary investment, if necessary.
* President Sasaki's comment on Mr. Tagawa's competency: "He is good
at energizing organization."
Takashi Sasaki, president of JTB, stated retrospectively, "I am
happy because I could pursue and achieve major reforms of the company
at a difficult time by uniting staff's power. After splitting the
company into smaller units, the mission of employees became so
specific that they could devote themselves to customer service and
produce better results. Generally speaking, however, there are so
many problems encircling travel agencies today."
Having said this, he continued by way of giving a reason of
selecting Mr. Tagawa as the next president, "We have enhanced
financial strength. Our next challenge is to reinforce sales power.
So we have chosen a competent person in sales who can lead the group
by integrating the sales network of the group companies." With Mr.
Tagawa's involvement with the Federation of Tourism Industry Trade
Unions in mind, Mr. Sasaki made a comment on him that he is a type of
person who is good at energizing an organization.
Mr. Yoshikawa of KNT Suggests Making Next Midterm Business Plan
Involving All Staff to Satisfy Stake Holders
Early-May 2008
Katsuhisa Yoshikawa, new president of Kinki Nippon Tourist (KNT),
said at the interview with Travel Vision that he was going to draw up
a next medium-term business plan by the end of August. He suggested
the plan would be formulated, not by a top-down approach, but with
participation of all the key staff in every division of the company.
With the view of the financial loss and non-payment of dividends
in the last fiscal year, he is eager to take an initiative to make
the company productive so that it can satisfy all the stake holders
including shareholders, employees, Japan Ryokan & Hotel Association,
partner agencies, and other suppliers.
Since the first-quarter earnings of the current fiscal year did
not come up to expectation, some say capital injection from the
parent company, Kintetsu Corp., would be inevitable. He did not
totally deny the possibility but maintained that making the best use
of the own management resources should be the first consideration.
When the company is in need of extra funds, he said, the management
must decide on the best option from bank loan, bond issuance, or
capital infusion from the parent company.
Mr. Yoshikawa acknowledges that three divisions of the company,
namely, ECC (event, convention, congress-related business),
e-business (online sales), and International Division (inbound
travel), are the fast growing sectors, to which KNT's resources
should be allocated intensively.
He emphasized at the same time that the company is so far
successful in trimming the secondary business of travel and
concentrating on travel agency business itself. In fact, it divested
last year two subsidiaries of Hakone Kogen Hotel and Hokko Daiwa
Taxi, and three other subsidiaries including Oku-Nikko Kogen Hotel
became equity method affiliates and therefore ceased to be
consolidated from this year.
KNT Starts Charter Operation to Rota; Mr. Ochi Comments, "The Way We Should Do."
Early-May 2008
Kinki Nippon Tourist (KNT) celebrated at Narita Airport on April
26 the first flight of the series charter operation to Rota on
Continental Airlines. It scheduled three flights during the spring
holiday on April 26, 29, and May 3, expecting to carry 450 travelers.
KNT has a two-year exclusive agreement with Continental to
charter flights to Rota, and is going to send 6,000 travelers this
year to Rota on 40 flights. It plans 17 flights from July to October,
11 flights from Narita (Tokyo), 2 from Nagoya, 3 from Osaka, and 1
from Fukuoka. Some flights for special-purpose use are programmed
after October, such as for triathlon teams and for a golf tournament.
A flight will be operated from Sendai in wintertime.
Yoshinori Ochi, senior managing director of KNT, comments on the
significance of the programmed charter, saying "Japanese visitors to
Rota number only 3,000 a year, while visitors to Saipan total 200,000
but came to a bottleneck by reduced number of flights serving there.
For visiting Rota, people normally have to stay overnight at Guam or
Saipan for connection. This charter project is therefore something we
had to launch from the view point of offering a direct access and
developing a new destination."
It took KNT more than a year and a half for the preparation of
this charter project. In time for the operation of the charter
flights this time, the runway at the Rota airport was reportedly
extended so as to enable take-off and landing of medium-sized
aircrafts.
Mr. Ochi says, "Rota, embraced in nature, is a perfect place to
spend leisure time. We will explore and develop the tourist
attraction in cooperation with Marianas Visitors Authority, the State
Government, Continental Airlines, and the island folks." He is eager
to develop other destinations in a harmonious way with environments,
local communities and to the satisfaction of visitors, leveraging the
charter flights that will keep creating demand.
Hisaki Taguchi, general manager of Holiday Division Eastern Japan
at KNT, says, "We were somewhat afraid our charter tours for spring
holiday might not be competitive pricewise considering a negative
growth of overseas travelers due to the unfavorable calendar dates,
but we could actually sell them out by the middle of March." KNT
could successfully solicit participants from different market
segments such as families, divers, and golfers.
As far as the forthcoming summer series is concerned, the price
would soon be fixed after watching a movement of equivalent Guam and
Saipan tours, he said, but it is likely that the price will come down
a bit from the level of the spring holiday.
JAL Group Increases Charter Flights from Haneda by 280% to 800 in
FY2008 with Substantial Increase on Hong Kong Route
Early-May 2008
The JAL Group plans to operate approximately 800 (400
round-trips) charter flights from/ to Haneda during FY2008, thereby
substantially exceeding the 280 charter flights operated during the
previous fiscal year. The aggregated number of planned charter
flights, including departures from regional airports, is expected to
be approximately 1200 flights (600round-trips), 66.6% of which will
be served from Tokyo Haneda, representing more than half of the total
number of charter flights for FY2008.
Mainly attributed to the substantial increase will be, as JAL
comments, the Haneda/ Hong Kong charter flights starting from July 1
this summer. The airline had originally planned to operate some 280
ad-hoc charter flights from Haneda. Then, an additional charter
flight plan has come up to include about 400 flights with the
destination Hong Kong, 2 weekly flights to Incheon, Seoul from April
15, a total of 8 flights to Ulaanbaatar during the months of July and
August, 10 flights to Palau in October and 14 flights to Honolulu in
August, thus substantially increasing the number of charter flights.
In contrast, the number of charters departing from other than Haneda
will be reduced by 250 flights to approximately 400 compared to the
previous fiscal year.
In addition to package tour sales, JAL also launched both normal
and discounted fares for individual customers effective from April
25. The airline currently serves 2 daily flights between Tokyo Narita
and Hong Kong and is of the opinion that "the existing ANA's Haneda/
Hong Kong route has not brought any negative impact on part of JAL
with no change to the traffic demand. JAL's Narita/ Hong Kong flight
has different schedule from its Haneda/ Hong Kong flight, thus
expects to attract a different type of market demand." The airline is
scheduled to operate the new route with the following timing.
*JAL Charter Flight Schedule Haneda/ Hong Kong
dep. HND 20.30 arr. HKG 00.05
dep. HKG 01.20 arr. HND 06.30
Aircraft: Boeing B767-300ER (237 seats)
ANA Posts A Record Net Profit for FY2007
Early-May 2008
ANA Group reported consolidated financial performance for FY2007
(April 1, 2007 - March 31, 2008) as follows:
Revenue: 1,487.8 billion yen (-0.1% over FY2006)
Operating profit: 84.3 billion yen (-8.5)
Recurring profit: 56.5 billion yen (-9.7)
Net profit: 64.1 billion yen (+96.4)
Consolidated revenue for the fiscal year remained virtually at
the same level as FY2006 thanks to a strong performance by airlines
within the Group. Operating profit decreased by 8.5% as a result of
the accelerated depreciation of aircraft in order to renew its fleet.
However, the sale of hotel assets in the first half of the fiscal
year contributed significantly in posting a record net profit with a
96% year-over-year increase.
Revenue by Air Transport segment increased a 4.2% to 1,301.6
billionyen, however, operating profit decreased a 2.2% to 77.9
billion yen of which domestic and international shares were
approximately 50 billion yen and 25 billion yen respectively. Despite
ever-increasing competition among domestic carriers and against
railways, ANA domestic operations performed well to improve revenues
through flexible discount fares, revenue management and sales
promotions.
International operations, thanks to strong demand for business
travel and effective discount policy on PEX fares including "Biz-Wari
Web" fares, continued strong in the midst of escalating fuel
surcharges. Comparison by routes show China routes reflect difficult
circumstances in connection with the dispute over Chinese-made frozen
Gyoza dumplings that sickened a number of people in Japan and the
Tibet issue. On the other hand, Europe, North America and Asia in
general performed well, which resulted in an increase of 11.9% in
revenue over the previous year.
New routes to Asian cities including Shanghai inaugurated from
Tokyo's Haneda Airport have recorded load factors in 80 percent range
thereby clearly capturing demands from Yokohama and western part of
Tokyo.
With regard to escalating fuel prices, ANA, at the April 30 press
meeting, revealed that the total fuel bill for FY2006 was 189.2
billion yen, which was increased by 30.6 billion yen to 219.8 billion
yen in FY2007. A total of 29 billion yen was recovered in the form of
fuel surcharges in FY2007. A fuel bill of 256.6 billion yen is
forecasted for FY2008, an increase of 35 billion yen of which 30
billion yen will be passed on to fuel surcharges. New level of
surcharge after July 2008 will be announced after the Golden Week
holidays.
As to the outlook for FY2008, despite uncertainty in economic
environment, ANA Group forecasts an increase in revenue by
introducing market-friendly products, strengthening of
competitiveness through attractive pricing strategy aimed to capture
individual passenger demand. It will improve its network at Haneda
Airport to spur travel demand and will continue to reinforce its
revenue base. It forecasts a revenue of 1.51 trillion yen, operating
income of 80 billion yen, recurring income of 52 billion yen and net
income of 27 billion yen.
*Air Transport Segment
Domestic (Consolidated)
Revenue (billion yen): 739.5 (+1.9% over FY2006)
No of Passengers (000): 45,557 (-2.0)
Available Seat Kilometers (million km): 62,651 (+0.4)
Revenue Seat Kilometers (million km): 39,928 (-1.6)
Load Factor (%) : 63.7
International (Consolidated)*
Revenue (billion yen) : 311.5 (+11.9% over FY2006))
No of Passengers (000): 4,827 (+6.0)
Available Seat Kilometers (million km): 28,285 (+6.3)
Revenue Seat Kilometers (million km): 21,291 (+5.7)
Load Factor (%): 75.3
*Figures include code-share flights operated by United (KIX/ HNL) and
Eva Air.
*Travel Segment
Revenue (Domestic Package Tours in billion yen): 150.3 (+6.9%)
Revenue (International Package Tours in billion yen): 43.9 (-3.7%)
Transaero Airlines Launches Narita/ St. Petersburg Service,
Anticipating to Expand International Exchange
Early-May 2008
Transaero Airlines (UN) started two weekly flights on April 25
between Tokyo Narita and St. Petersburg. Alexander Pleshakov, the
airline's chairman who visited Japan by its inaugural flight said,
"We are most honored to be able to fly to and from Narita Airport in
spite of many airlines on a long aiting list." "With our 17-year
safety record since the foundation of our company and on-going
improvement of our customer service, we shall strive for full loads
in the hope of paving the way for daily flight operation in the
foreseeable future," the chairman said.
During the inaugural flight ceremony, Valentina Matvienko,
Governor of St. Petersburg and Mikhail Galuzin, Russian Minister to
Japan welcomed the fact that "the new service by Transaero Airlines
will further enhance the exchange of tourism and business between
Japan and Russia, and in particular, between Japan and St.
Petersburg. They are committed that each of them would, in his own
capacity, support the airline to realize a daily flight operation.
Chairman Pleshakov anticipates that the Japan market will produce
75% of the total passenger load. The airline estimates the total
number of passengers to fluctuate between 12,000 and 13,000 during
2008 and aims to increase it to 20,000 in 2009.
The Chairman also predicts that business traffic share will be
"12% to 15%" of the total passengers boarding in Japan and hopes that
the business traffic demand will rise to "20% in 2009". St.
Petersburg has attracted more than 40 companies from Japan including
a Nissan Motor's auto assembly plant currently under construction.
Thus, the economic ties between the two countries enjoy continuous
progress.
In terms of touristic demand, out of the total Japanese visitors
to St. Petersburg in 2007, approximately 30,000 traveled via Moscow
and roughly 125,000 were flown in by charter flights. The new
scheduled service from Tokyo Narita should give a boost to the number
of visitor arrivals from Japan, said the airline. The airline's
direct flight from Narita shortens a flight time by about 3 hours
compared to an indirect flight via Moscow.
Transaero Airlines also aims to generate transit traffic to
Europe beyond St. Petersburg. As far as a tie-up with a Japanese
airline is concerned, the airline revealed, "The present tie-up with
Japan Airlines for cargo flights may possibly be extended to
passenger flights as well." Knowing that "Japanese customers are
extremely demanding when it comes to service aspects, we intend to
assign Japanese flight attendants, serve Japanese meals and provide
major Japanese newspapers onboard."
Meanwhile, Transaero has made a contract with Qantas Airways to offer
its business class passengers access to a Qantas airport lounge at
Narita.
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