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 Starts Up Working Group for Regular Meetings with MLIT, Carriers
Japan Association of Travel Agents (JATA) held on January 17 the
first meeting of "Working Group to Sort Out Problems Relating to
Airlines Operation." JATA is supposed to run the Visit World Campaign
with a view to boost overseas travel demand, but it acknowledges
there are several matters that require airlines' understanding and
cooperation in relation to seat supply and route operation.
Prior to the three-party meeting scheduled in February with
airlines and the Civil Aviation Bureau of Ministry of Land,
Infrastructure, Transport and Tourism (MLIT), JATA wants to sort out
relevant problems and formulate proposals to submit to the meeting on
behalf of travel agencies.
The working group is composed of JTB, JTB World Vacations, Kinki
Nippon Tourist, H.I.S., Hankyu Express, Nippon Travel Agency, and
JALPAK. At the meeting of January 17, the group held hearings from
representatives of these agencies on the present situation and will
soon get them into shape. It will conduct another round of hearings
if necessary.
LOOK JTB Takes Grip on Market with "Super Package Tour" for FY 2008;
Anticipates 1.41 Million Customers for FY 2007
JTB World Vacations, Inc. (JTBWV) has decided a strategy of LOOK
JTB for the spring/ summer season of 2008, that is, to continue the
policy implemented during the fiscal year 2007 and take a grip on
every sector of the market with "Super Package Tour". At the same
time, the company made an estimate of 1,412,000 for the customers to
be handled during the FY 2007, an all-time high and up four percent
from the previous year.
Fumiyuki Kitajima, president of JTBWV, said, "We will end up
outperforming the total market growth despite the tough situation.
Our commitment for FY 2008 as a package tour wholesaler is to sustain
the growth qualitatively and quantitatively." His goal for the coming
year is to handle 1,450,000 customers, up three percent from FY 2007.
JTBWV is going to focus on the sale of pricey European tours, but
expect Hawaii- bound customers to drop four percent due to the
suspended flight operation. Hawaii is the only destination that will
see a negative growth in the company's projection for FY 2008.
(Forecast for FY 2007 and target for FY 2008 are listed at the bottom
of this article.)
With regard to the business environment for 2008, JTBWV assumes
that ground cost will go up in the range of 2 to 15 percent over last
year and air fare will rise by 1 percent to 5 percent because of
airlines' acute consciousness of the bottom line; consequently, tour
cost will be pushed up by 4 or 5 percent, while selling price is
being kept within a hike of 2 percent on an average.
Mr. Kitajima makes a remark in this connection: "If earnings are
everything, we may as well focus our efforts on profitable
destinations and profitable seasons alone. However, since we are
expected to fulfill our mission as a responsible wholesaler, we must
achieve a growth from both qualitative and quantitative aspects to
boost total demand."
As means to step up business volume, the company is going to sell
near-departure tours deliberately, increase online sales, and develop
the Dynamic Package. With reference to price-appealing products, he
stated that his company might be compelled to market such products
out of strategic necessities but would not do so simply because some
destinations were not selling well.
* Forecast of the number of customers handled during FY 2007
(Destination: forecast | growth over FY 2006 | target for FY 2007 |
achievement over target)
Hawaii: 264,000 | +1% | 271,000 | -2.6%
Micronesia: 254,000 | -2% | 250,000 | +1.6%
U.S.A.: 72,000 | -5% | 77,000 | -6.5%
Europe: 169,000 | +7% | 165,000 | +2.4%
Asia: 470,000 | +10% | 438,000 | +7.3%
China: 85,000 | +6% | 101,000 | -15.9%
Oceania: 98,000 | -3% | 108,000 | -9.3%
Total: 1,412,000 | +4% | 1,410,000 | +0.1%
* Target in the number of customers for FY 2008
(Destination: target | growth over FY 2007)
Hawaii: 254,000 | -4%
Micronesia: 263,000 | +4%
U.S.A.: 72,000 | 0%
Europe: 180,000 | +7%
Asia: 480,000 | +2%
China: 99,000 | +16%
Oceania: 102,000 | +4%
Total: 1,450,000 | +3%
JALPAK Likely Books Profits for FY 2007 with 7% Growth in Customers,
Will Keep Same Level for First Half of FY 2008
Akihiko Kaji, president of JALPAK, made a comment on the latest
business performance as follows: "We made profits amounting to 500
million yen in the first half of the current fiscal year. I hope we
could finish the term with good results as favorable circumstances
have been carried on to the second half."
He emphasized that the internal shakeup had worked and
promotional measures produced a good effect on sales. He takes a
positive stance toward the market, saying, "If you are too reserved
and too cautious about the market, what you get is demand shrinkage
and a poor share of the Japanese economy. So we should step out for
the global scenes so that we could benefit ourselves from the two-way
tourism of inbound and outbound, fascinating people with memorable
trips."
JALPAK owed the good financial results in 2006 to its corporate
restructuring but in 2007 to good performance of package tour sales.
In fact, the number of customers handled during 2007 is expected to
have grown 7 percent. Although Mr. Kaji gave no indication of the
full-year results, he is confident of posting a gain in the net
profit and showing the company has restored profitability after
several years' slump.
Contributing factors to the turnaround are the implementation of
several key measures, such as reinforcement of sales capability of
contract agents, high-mix low-volume merchandising policy, system
integration of reservation and operation, and improved quality.
As an outlook for FY 2008, he sees no encouraging signs in the
market except the senior's segment, so the company continues to offer
such products as to cater to specific needs of the market.
Internally, new personnel and wage system was introduced last
year; it was intended to raise awareness of professionalism on the
part of employees and to make the most of female workforce. The
company hopes the new system will revitalize the staff and drive them
forcibly to each assignment, which would lead to an increase of sales
in the end.
* Target in the number of customers for the first half of the fiscal
year 2008 (Destination: total number | I'll | Ava -- growth over the
previous year in parenthesis)
Hawaii: 65,500 (+1%) | 17,000 (+2%) | 48,500 (+1%)
U.S.A.: 13,200 (0%) | 3,900 (+1%) | 9,300 (0%)
Europe: 21,700 (-1%) | 6,700 (+1%) | 15,000 (-2%)
Asia: 44,100 (+2%) | 10,100 (0%) | 34,000 (+3%)
Oceania: 18,750 (-4%) | 4,200 (-8%) | 14,550 (-2%)
Guam: 30,100 (0%) | 4,600 (-6%) | 25,500 (+2%)
China: 18,800 (-3%) | 4,500 (+4%) | 14,300 (-5%)
Taiwan: 10,600 (+1%) | 2,200 (+1%) | 8,400 (+1%)
Sekai-kiko: 450 (+47%) | 400 (+41%) | 50 (+117%)
Total: 223,200 (0%) | 53,600 (0%) | 169,600 (0%)
IATA Normal Transpacific Fares Up 13%, Reflecting Reduced Fuel
Surcharge
International Air Transport Association (IATA) announced to raise
IATA normal fares from Japan for FY2008 by 13% for the Transpacific,
Caribbean, and Hawaii routes and 10% for the Central and South
America routes.
IATA PEX fares will also be increased on the following routes.
Per weekday average rate, the West Coast and East Coast routes will
go up by 9.6% and 8.7% respectively, the Hawaii route by 4.4% and the
Central and South America route by 10%.
Business class weekday roundtrip fares, for instance, for Narita/
Los Angeles/ Narita will be between 547,700 yen and 619,000 yen and
for Japan/ Honolulu/ Japan will be between 441,400 yen and 498,800
yen. For other routes including Asia and Oceania, the respective fare
increase has already been approved. Flex fares are expected to be
introduced on the Europe route.
The current soaring fuel price is considered as a main factor for
the fare increase and should the increase be meant to absorb the
rising fuel costs, the present fuel surcharge would have to be
lowered relative to the fare increase.
The public relations office of two Japanese airlines said,
"Nothing has been decided including the fare increase." JAL further
commented, "Should the fares be raised, then we assume that we should
review the current fuel surcharge."
All Nippon Airways said, "We estimate our fuel costs for FY2008
to climb totally by 30 billion yen compared to FY2007. We strive to
recover the costs, by budgeting 10 billion yen and 20 billion yen
respectively on our domestic and international flight operations."
ANA announced on January 16 to increase its domestic normal fares.
The airline plans to make an adjustment for the balance between the
increased fares and fuel surcharges.
President of ANA, Mineo Yamamoto, has been of the opinion that
"The fuel surcharge should be partly absorbed by raising the
airfares." The public relations office also confirmed, "The company
strategy will be expected to be in line with the remarks by President
Yamamoto."
JAL Files PEX Fares for FY2008; Intending to Discount IATA PEX Fares
by More Than 70%, Eying Abolishment of Lowest Price Limit
Japan Airlines submitted an application with Ministry of Land,
Infrastructure and Transport on January 22 requesting Government
approval for the economy class discount fares applicable from Japan
to Hawaii, Guam, North and South America and Europe. Sale will start
on January 23.
In view of the policy by MLIT to abolish the lowest price limit,
currently imposed on the international carrier PEX fares, the airline
is said to have filed certain Goku fares with a reduction of 80
percent of IATA PEX fares, the highest reduction of which is
presently 70%.
The fare Goku 7 Type C for Tokyo/ Honolulu, for instance, is
available from 53,000 yen and Economy Saver is from 90,000 yen. The
fare Goku 14 Type C for Tokyo/ New York is available from 72,000 yen
and Economy Saver is from 205,000 yen.
The difference between Type A, Type B and Type C fares may vary
from one destination to another, but overall, the difference was
about 8,000 yen in the second part of FY2007 while it will be roughly
10,000 yen for FY2008. The difference between the weekday and weekend
fares was 10,000 yen in the second part of FY2007 while it will
average about 14,000 yen for FY2008.
The Economy Saver fares also vary from one destination to
another. The fare difference between the weekday and weekend travel
for the transpacific route, for example, averaged 18,000 yen in the
second part of FY2007 while the difference will become 20,000 yen for
FY2008, reflecting a tendency of further fare increase. The Dynamic
Pricing introduced last year, which is determined according to the
number of unreserved seats available, will remain applicable also for
FY2008.
JAL anticipates to meet the challenge of the combined strategy of
the yield improvement and the expansion of traffic demand.
There has been no policy change by MLIT as to the abolishment of
the lowest price limit and a relevant notice of the revision has not
yet been issued by MLIT.
Air France Plans to Introduce A380 in Summer 2009; Dialogue with
Narita Airport Authority Commenced
Claude Thenevin, General Manager for Japan, Air France and KLM,
briefed the media recently that the introduction of A380 by Air
France on the Japan route is now scheduled for summer 2009. AF, at
the end of 2006, had revealed its intension to introduce the world's
largest aircraft on its Narita/ Paris route. It commenced pursuing
dialogue with the Narita International Airport Corporation (NIAC) on
preparations for accommodating A380 that include airport
infrastructure, facilities and equipments.
Singapore Airlines has officially expressed its intension to fly
A380 into Narita Airport. NIAC is in the process of constructing a
boarding bridge to service the double-decker passenger aircraft at
Satellite 4 in Terminal 1 where SQ operates.
It is anticipated that it will take one and a half years for NRT
airport to be fully prepared to accommodate A380, and as such, the
decision by AF at this time is expected to help accelerate the
preparation process.
AF currently operates two flights daily at Narita. "AF expects to
operate A380 for the morning and afternoon flight respectively," said
Thenevin. At Narita where any expansion is restricted until sometime
in 2010, AF intends to increase total seats offered by operating
A380, thus improve its presence in the Japanese market.
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