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.
Singapore Airlines to Suspend KIX/ Bangkok Service Following Network
Restructuring; "No Winners in Fierce Pricing War"
Mid-April 2008
Singapore Airlines (SQ) will suspend its Kansai/ Bangkok/
Singapore route reflecting the route network restructuring. The
airline explained that the network restructuring aims to implement
greater flexibility to the ever-changing customer demand.
Accordingly, the airline plans to increase flight frequency of the
Australia, China and India routes which show a vibrant traffic growth
with route profitability.
Since the Kansai/ Bangkok route is also served by Japan Airlines
and Thai International, it is pointed out that the price competition
has long become fierce in the market for airline tickets and package
tours.
Singapore Airlines notified travel agents on April 1 of the
suspension of the KIX/ Singapore route via Bangkok. Commenting on the
flight suspension, JTB and HIS observed, "We do not expect a serious
impact as such and the customers may suffer no loss." Some travel
agents, however, are hard-pressed to transfer the booked passengers
to other airlines. Singapore Airlines will deal with the arising
problems in good faith, said the airline' spublic relations office.
Although the market may consequently expect to suffer a decrease
in travel demand, the travel agents generally seem to remain
relatively undisturbed, saying that there are only a few occasions a
year when seat capacity offer may become critical during, for
instance, large-scale conventions.
The Osaka Tourism Authority of Thailand office (TAT) commented
with regret, "We do not think we have experienced a downturn in
traffic demand to Thailand." "We will continue our
campaign for the coming summer to boost the traffic demand."
* Editor's Opinion: No Winners in Fierce Price War
The leisure routes served from KIX have been basically
experiencing severe price competition. Airlines point out that those
airlines have pulled out of the Kansai route "because they had
apparently suffered the low yield in spite of the high seat load
factor. For the same reason, the Saipan and Transpacific routes have
been also facing a decrease in the flight frequency.
Singapore Airlines has made comments on the suspension of its
KIX/ Bangkok/ Singapore service, citing only that "We are flexibly
responding to a change in traffic demand." Some travel agents have
observed that the airline must have suffered a low yield contrary to
the high seat load factor."
Airlines collect fuel surcharges to compensate losses on the
soaring fuel price, but in reality, the fuel surcharges are not
sufficient to cover operating costs to maintain routes. The current
market environment unfortunately does not allow the airlines and
travel agents to come up with prices to meet the mutual market needs.
It can perhaps be analyzed that a deeper-lying unfavorable structure
observed in the present market environment has also compelled
Singapore Airlines to give up the KIX/ Singapore route via Bangkok.
Should travel agents continue to purchase and sell airline seats
at a low price, it would shake the foundation of the travel industry.
The profits will further deteriorate for both airlines and travel
agents. While people make a lot of noise about a hike in prices of
daily goods, air fares and tour prices tend to go down. The pricing
mechanism is indeed distorted. The unusual situation of the present
travel industry might have brought the end to the KIX/ Bangkok route
of Singapore Airlines.
Not only the travel agents but also the airlines should compete
among themselves with well-balanced price and profit mechanism,
otherwise the travel industry will never attain its full growth.
Unless customers travel, travel agents and airlines equally suffer a
loss.
The travel industry aims to attract 20 million travelers. In
order to realize the mutual goal, it is high time that the travel
agents and the airlines should stop throat-cutting price negotiations
and join forces to try to boost the number of outbound travelers, by
supporting the scheduled airlines and at the same time, by securing
the mutual profits.(Opinion: by J. Suzuki, Editorial Chief. Travel Vision, Inc)
Vietnam Airlines to Start Nagoya/ Hanoi Service This Summer,
Expecting Both Business and Leisure Traffic Demand
Mid-April 2008
Vietnam Airlines (VN) will inaugurate 4 weekly flights from Nagoya to
Hanoi starting from August 12. The airline had temporarily suspended
the Nagoya/ Ho Chi Minh City route in December 2007 due to the
aircraft rotation at that time.
The airline has decided to resume its operation from Nagoya to
serve Hanoi, reflecting growing demand for the direct service from
the travel industry and the business community in Chubu region.
The airline has chosen Hanoi as a new destination from Nagoya
with an eye on stronger demand both in business and leisure traffic
than Ho Chi Minh City. In terms of business traffic, the vicinity of
Hanoi, including Thang Long Industrial Park near Hanoi Noibai
Airport, has attracted Japanese companies to build factories out
there. Representatives for investments are also located in Capital
City Hanoi, attracting many business travelers from Nagoya.
In terms of leisure traffic as well, Hanoi serves more domestic
destinations than Ho Chi Minh City and offers also a gateway to Haron
Bay, a World Heritage site. Besides, Vietnam Airlines started new
service last year to three countries in Indochina. The Golden Route,
as it is called, will bring beyond traffic to Luang Prabang in Laos
and Siem Reap in Cambodia, and from Hanoi, Kunming, China is also
served, stresses Vietnam Airlines. From Nagoya, the airline provides
the same day onward connections at Hanoi to destinations within
Indochina.
The wholesalers in Chubu region commented on the coming
resumption of the route from Nagoya, saying, "We welcome Vietnam
Airlines back to Nagoya to resume the scheduled service. An itinerary
combining Haron Bay, a World Heritage site, and Angkor Wat in
Cambodia will attract many customers. The flight to Hanoi from Nagoya
offers easy access to the combined destinations."
Aircraft to be put into service will be the Airbus A321
configured with 16 Business and 167 Economy class seats, totaling
183. The seating capacity per aircraft is 34 seats less compared to
the previous aircraft Boeing B777 which had formally served Ho Chin
Minh City from Nagoya.
The aggregated weekly capacity offer will, however, be increased
by 81 seats to 732. The seat load factor of the Nagoya/ Ho Chi Ming
City had averaged some 60% to 70% and during the off-season it had
further dropped down to 50% or less. The Airbus A321 is just the
right equipment for the Chubu regional market, said a travel agent in
Chubu, anticipating a steady supply of capacity.
In the future, Vietnam Airlines intends to boost the number of
customers from all over Japan in addition to the local customers from
Chubu region.
MLIT Paying Close Attention to Developments at Private Sector
Meetings on Fuel Surcharges; A Move to Resolve the Issue Seen
Mid-April 2008
Yoshiaki Honpo, deputy vice minister for Tourism, the Ministry of
Land, Infrastructure, Transport and Tourism (MLIT), at a meeting with
the travel trade press, disclosed his thoughts on the various issues
relating to the collection of fuel surcharges that it is vitally
important to maintain a posture from the standpoint of consumer. His
remarks were made in response to a comment raised by Takashi Sasaki,
president and CEO of JTB Corporation that the fuel surcharges are
regarded as "dual pricing."
"It is difficult for consumers to understand, " said Honpo and
continued that he is closely watching developments at meetings
between airlines and travel agents.
Sasaki mentioned at a press meeting held on the occasion of the
Visit World Campaign (VWC) that he has brought the fuel surcharge
issue to the attention of the Japan Civil Aviation Bureau indicating
that there is no satisfactory argument to convince the public from
consumers' viewpoint.
In negotiating IT fares for package tours, he explained that he
is trying to negotiate IT fares which incorporate the fuel
surcharges. When an agreement is reached with airlines on such
package fares, he then, as the next step, expressed his plan to
market PEX fares under the same scheme of combining the fuel
surcharges and fares.
"We are presently trying to resolve the issue through dialogue
between travel agents and airlines concerned, but when it happens, it
will help clear up remarks like 'I haven't heard such a thing!' in
the minds of customers when purchasing a package tour at a travel
agent counter or resolve inappropriate disincentive to overseas
travel in general," continued he and indicated a direction to resolve
this issue.
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