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.
JATA Conceives Charter Flights Operation to Key Markets for Accomplishment of 20 Million Overseas Travelers Project
As part of action plan for the accomplishment of 20 million
outbound travelers in 2010, Japan Association of Travel Agents (JATA)
is studying the feasibility of boosting travel demand across the
nation by selecting target destinations and operating hundreds of
charter flights to these places.
The destinations could be 13 countries and areas including the
United States, Hawaii, Australia, Canada, United Kingdom, France,
China, Korea, Taiwan, Hong Kong, Thailand, Viet Nam, and Cambodia.
In view of the fact that operation of some schedules flights has
been suspended or reduced in number and the use of Individual
Inclusive Tour Fare (IIT Fare) is not welcomed to airlines, JATA
regards charter flights as effective means of increasing seat
capacity and creating travel demand locally.
The number of flights to be operated is to be fixed at a later
date, but JATA is going to set a target number of visitors for each
destination and calculate available seats on scheduled flights, then
it will arrive at a desirable number of extra flights to fill the
gap. In case of Hawaii, for instance, it does a trial calculation of
operating 200 to 300 flights in 2008 in one-way basis count, 400
flights in 2009, and 500 flights in 2010.
These flights will be assigned to Haneda Airport as a primal
gateway, but due to the slot constraint at Haneda they will
eventually be split 50-50 with regional airports.
Aside from charter flights operation, JATA have some agenda on
the action programs such as promotional campaigns focusing on
specific age groups, a campaign for becoming passport holders, and
settlement of oil surcharge issue.
JATA will seek acceleration of deregulation from foreign
governments as well as from the Japanese government. As agenda for
such, it demands to remove a ceiling of expenses and duration of trip
imposed on the school excursion, or to waive visa requirement for the
students on bilateral basis. It will also request the Japanese
government to make company travel free of taxation, or to contrive
incentives for workers who want to take longer vacation, or to
further ease the ITC charter rules.
To the foreign governments, it has a mind to talk into
eliminating the limit of staying period in the working holiday
program or waiving a visa requirement strictly for a sightseeing
purpose, especially in India, Russia, and Brazil.
As the schedule for the following months, JATA will announce its
action plan in January 2008 and start on a course of action in April.
JATA's Fuel Surcharge Team to Propose Comprehensive Pricing in Its Recommendation Submitted Next February, Eyeing Consumer Sentiment
Fuel Surcharge Team, formed recently at Japan Association of
Travel Agents (JATA) and headed by Councilor Jun Ishiyama, is moving
to frame the thoughts of travel agencies toward the unified opinion
that fuel surcharge should be included in the travel products in
consideration of consumers' sentiment.
All the member companies comprising the team do not agree on the
comprehensive pricing method yet, but they feel the need to dispel
consumers' mistrust in any possible manner. After a series of
discussion on this matter from various standpoints of company
executives, tour planners, and retailers, the team will determines
the direction to proceed by the end of January 2008.
It submits a proposal in late February and is supposed to have
meetings in March with Ministry of Land, Infrastructure, and
Transport (MLIT), airlines, and Japan Fair Trade Commission.
The team is working to propose comprehensive pricing to include
the surcharge. JATA had earlier conducted a survey on this issue with
travel agencies giving them four options, i.e. (1) to waive the
surcharge on the part of airlines, (2) to denote the amount on the
ticket alongside the authorized fare, (3) to price travel products in
a way to include the surcharge on agency side, and (4) to build the
surcharge into the fare system, From the viewpoint of package tour
sales, the comprehensive pricing method was supported unanimously.
However, the risk remains with package tour operators in this
case because they must absorb any future hike of surcharge and face a
complicated problem of sales commission payment. Therefore, some of
those who are in favor of the method append a note to say such a
method would be feasible only under certain conditions or that it
might be a bit unrealistic.
One of the possible remedies would be to request airlines to
review the surcharge only when it is in time for the travel agencies
to merchandise travel products for the next season.
In view of travel agencies' difficult situation in dealing with
customers, JATA once saw eye to eye with MLIT on the revision of
surcharge amount once every six months, but it did not take effect
after all. This time, being more considerate of consumer sentiment
and reaction, JATA seeks a solution that could wipe out consumers'
mistrust and clarify murky fare construction, which otherwise would
be detrimental to the government's policy of expanding overseas
travel market.
At the stage of introduction, it was assumed from consumers'
perception that they could concede a charge of 500 yen to 2,500 yen
for a portion, but now they claim the current level is too high, thus
the surcharge becoming an impediment to the market growth.
It happens that after a customer makes a contract to buy a travel
product, he or she is often charged more than initially agreed
because of an unexpected revision of surcharge amount. This is
something that consumers do not feel happy about and they even label
the agency as a fraud. With regard to the controversy on oil
surcharge issue, JATA maintains that fare structure has not been
fully accounted for up to now and the airlines are held responsible
for it.
The way to price travel products in lump sum is a sort of
solution to overcome the existing problem, but it may trigger a new
round of price war among travel agencies even at the sacrifice of the
surcharge revenue, which is another risk for the agencies.
On the other hand, MLIT issued an official letter saying that
fuel surcharge is a mandatory cost of travel that travelers have to
pay but does not constitute a part of travel expenses payable to
travel agencies. The letter implies it is a necessary cost item
comparable to the Passenger Facility Charge at the airport, but it
remains to be defined more precisely. For that matter, travel
agencies are said to be discussing their own role of providing
consumers with timely and convincing explanation.
Fare Increase to Absorb Fuel Surcharge as "System Not Transparent, "Says ANA.
Commenting on the fuel surcharge, ANA mentioned, "It should be partly absorbed by fare increase."
ANA public relations office further explained that "The recent
soaring kerosene price has made the fuel surcharge relatively high
compared to the airfare. The customers and many others people claim
that the current fuel surcharge system is nontransparent. It also
gives the burden to the travel agents who have to collect the
surcharge from the travelers. "
The airline has made a proposal to IATA Fare Adjustment
Conference that current airfares be increased to absorb part of the
fuel surcharge, thereby lowering the relative amount of the current
fuel surcharge, said the public relations office.
Despite the rising cost of jet fuel, ANA has decided to retain
its fuel surcharge for January to March 2008 at the present levels,
while JAL has decided otherwise. It is the very first time that two
Japanese carriers took different strategies toward the fuel surcharge.
"The different views taken by the two airlines will have an
influence on the future policy on the fuel surcharge," commented ANA.
The airline will continue to further evaluate the role of the fuel
surcharge.
ANA Decides to Form an LCC; To be Established in FY2009 while its Operation Slated for FY2010
ANA recently made clear its intent to form an LCC (Low Cost
Carrier) sometime in FY2009 (April 1, 2009 - March 31, 2010), which
will mainly operate international routes within Asia.
ANA, as a policy, set a timetable for its LCC operation when an
increase of departure and arrival slots are expected at Haneda
Airport along with completion of the 4th runway in autumn of 2010, as
well as Narita Airport as a result of completion of the extension of
its 2nd runway.
According to ANA public relations office, it intends to establish
a company capable of competing with existing LCCs in Asia. At this
time, it is exploring every avenue including a possible location of
its hub, means of establishing a company, etc. The final result will
be incorporated in the medium-term business plan to be released in
February 2008.
Regarding the possible location of its hub, when all the
associated costs including landing charge, parking charge, facility
user charges, personnel cost are considered, they are comparatively
higher in Japan. ANA, therefore, is also evaluating a possibility of
overseas locations such as Thailand, Singapore, Australia, etc.
The establishment of the LCC will not be limited to a subsidiary
with ANA's own capital or a joint company through a joint capital
investment is also being explored as an alternative.
Korean Air Seeks Tie-Up with Surface Transport to Promote Travel Between Japan, Korea and China; Eying Also New Routes Expanded by Deregulation
B.C. Kwon, General Manager, Route Management Team Japan, Korean
Air, said that for the future deregulation between Japan, China and
Korea, it will be essential for them, a Korean airline to join forces
with surface transport.
In Japan, East Japan Railway Company (JR East) has been in
extensive cooperation with JAL and ANA in various customer services
including the mileage programs. Reflecting Japan's marketing move,
Korean Air added, it is fundamental to improve means of surface
transportation within Korea to enhance the convenience of travelers.
Meanwhile, the Haneda/ Beijing Hongqiao charter operations
started and just one month later, the scheduled charter flights began
between Seoul's Gimpo and Hongqiao. These new routes link the
airports centrally situated in the major cities of the three
countries. Fuyushiba, Japan's Minister of Land, Infrastructure and
Transport proposed a plan for scheduled charter flights on seasonal
basis between Haneda and Beijing.
B.C. Kwon anticipated that style of traveling between Japan,
China and Korea may change in next 5 years or so thanks to
partnership between the air and the ground.
In actuality, however, Korean domestic carriers have fierce
competition with KTX (Korean Train eXpress). Although the airlines
would not join forces with the railway companies in the foreseeable
future, Korean Air observes that "While JR and Japanese domestic
airlines have throat-cutting competition in customer service, their
passengers themselves benefit from the mileage program by using both
air and rail which will eventually generate traffic to both of them."
Capitalizing on the actual example in Japan, Korean Air will look
for a marketable strategy for partnership and further promote the
regional alliance among the three countries Japan, China and Korea.
Thereby, added B.C. Kwon, Japanese can travel in Korea and China as
comfortably as in Japan. The airline hopes to vitalize the regional
exchanges among the countries.
In regard to the ground transportation, Japan's MLIT,
establishing a study group to promote international IC tickets valid
reciprocally in the countries concerned, evaluates its
user-friendliness and its feasibility. The Korean travel industry as
well will make efforts toward the similar marketing move in Japan.
*Policy on Routes Based on Japan/ Korea Deregulation
Commenting on the deregulation between Japan and Korea, B.C. Kwon
specifically mentioned Shizuoka Airport scheduled to be opened in
2009, showing his eagerness to start daily flight operation on the
day the airport becomes operational. Korean Air anticipates
generating package tours from Korea featuring both Tokyo and Nagoya
with Mt. Fuji as a tourist attraction.
Situated between Tokyo and Nagoya, Shizuoka Airport is expected
to attract outbound traffic from the regions between the two cities.
In the future, the airline hopes to organize familiarization trips
targeting both Korean and Japanese travel agents in order to
encourage them to develop package tours.
Korean Air mentioned Sendai and Okinawa, its off-line stations until
now, as candidate airports to serve with charter and seasonal
flights. Sharing the same opinion with O.S. Kwon, Manager Vice
President Japan, B.C. Kwon underlined, "The airline will first have
to ascertain if there is enough potential traffic to share with its
competitors."
*With Network Expansion, Seoul Incheon Becomes Hub; KE Steadily
Attracts Japan/ Korea/ China Traffic
During 2007, Korean Air inaugurated 3 weekly flights each to
Vienna, Madrid and Melbourne and in 2008, Munich and Sao Paulo via
Los Angeles will be newly added to the network. The expansion of the
network is driven by the robust outbound traffic originating from
Korea, but the airline also intends to take advantage of the route
expansion to boost the transit traffic from Japan.
The China route shows a continuous expansion. Korean Air expects
Chinese outbound travel to explode after the Beijing Olympic Games
2008, estimating the number of travelers to soar not only from
traffic among the aforementioned three countries but also from
overseas traffic in general.
The airline is eager to enter the Chinese market, saying, "We
would like to prepare ourselves for a feasible liberalization of
overseas travel of Chinese people." In particular, the U.S. visa
restrictions imposed on Chinese nationals are officially announced to
be deregulated.
Regarding traffic to BRICs, namely Brazil with a new destination Sao
Paulo, Russia, India and China, Korean Air, including its own traffic
from Korea, concluded that "We will not simply follow the developed
market, but rather respond to the regional market development by
striving to generate traffic increase."
HVCB Works with HTJ to Shore Up MICE in Hawaii, to Double Demand in Japan
Hawaii Visitors & Convention Bureau (HVCB) is going to shore up
solicitation of MICE-related events in the Japanese market by working
with Hawaii Tourism Japan (HTJ) and assigned the coordinating job to
Shigeru Nishi, Regional Director of Asian Sales, Corporate, Meetings
& Incentives, at HVCB. This is what Michael Murray, Vice President -
Sales & Marketing, Corporate, Meetings & Incentives at HVCB,
disclosed on his recent visit to Tokyo.
Overall MICE visitors to Hawaii number some 700,000 annually
representing nearly 10 percent of total visitor arrivals, of which 3
percent, or one third, is business-related. Those of the 10 percent
in head count make up 16 percent in terms of local spending. HVCB
aspires to boost their arrivals to 20 percent level in five years.
Japanese MICE visitors in 2006 were 72,000 that account for 5.2
percent of the total arrivals 1,374,454. The number is expected to
fall by 30 percent this year because organizers are wary of
enforcement of the anti-smoking law. Meanwhile, Takashi Ichikura,
Director of HTJ, points out that they are coming back and hopes for
the attainment of 10 percent share before long as MICE has high
potentiality.
Currently, "incentives" constitute about a half of this category
in the Japanese market, but other types are proliferating as is
symbolized by Toyota's Convention of 5,000 attendants held a short
while ago.
As a guideline of promotion from now, HVCB tries to project an
image of Hawaii as a perfect place for business gathering. It also
appeals a globally advanced position of Hawaii in the field of health
and wellness, information technology, marine science, and earth
science. In promoting meetings and conventions, it emphasizes
accessibility from any point of the Pacific rim. In fact, the
aforementioned Toyota's Convention collected participants from every
part of the Pacific rim.
Mr. Nishi and his team will make contact aggressively with
organizers, companies, and industry groups of international caliber
and propose to offer services that cater to their specific
requirements.
HVCB is going to organize "Hawaii Speakers Bureau" consisting of
20 high-profile business persons selected from Hawaii or the U.S. and
invite potential organizers to its lecture meetings to provide them
with MICE experience in Hawaii. This scheme will begin in March 2008.
Some may cast doubt on the notion to advertise the leisure
destination as a business venue. Mr. Murray argues against this,
saying, "On the contrary, resorts like Hawaii can heighten motivation
and produce good results on business." Mr. Ichikura emphasizes the
competitiveness of Hawaii with the assertion that family members
visiting Hawaii on incentive tours can enjoy to the fullest extent,
regardless of age and sex, without worrying about security, hygienic
environment, and food.
Sophisticated tourism infrastructure including accommodation
capacity of 72,000 rooms and convention facilities are the strong
advantages of Hawaii that they want to appeal.
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