By George F. Lee, Star-Bulletin
Gov. Ben Cayetano confers with House Speaker Joseph Souki
before this morning's State of the State address.

The HVCB said it would spend most of the money to promote the state in Japan.

The amount would be in addition to the basic legislative appropriation for HVCB marketing, Cayetano said in his State of the State address.

The governor's proposal was welcomed by the HVCB, which last week said that it now expects the Japanese visitor count to be flat for 1997.

Meanwhile, two major Japanese airlines also had some good news today for the state's No. 1 industry.

Japan Airlines Inc. said it will increase its direct Tokyo-Kona service to four flights a week, in June, from the current three flights. Also, JAL said it plans to increase its Honolulu-Sendai service to five flights a week in April, from two flights.

And All Nippon Airways Co. said it's on target to start its planned daily Nagoya-Honolulu service on Feb. 1, using 411-passenger Boeing 747 jumbos.

Paul Casey, HVCB president, said the bureau was aware of the airlines' expansion plans last week when it revised its estimate for Japanese arrivals in 1997 to show no growth from 1996. The bureau originally projected a 4 percent to 6 percent increase in Japanese arrivals this year, and an overall visitor count boost of 2 percent to 4 percent.

Casey told state legislators Friday that the bureau lowered its original estimate after bureau researchers made extensive telephone checks with tour wholesalers and retailers in Japan.

He said the governor's proposal for $10 million in extra funds should be treated as separate from the HVCB's request for future funding of $54 million in fiscal 1998 and $62 million the following year. The bureau received $24 million in state funding in fiscal 1997, which ends June 30.

"We would urge the Legislature to approve this (Cayetano) request quickly because the Japan market is deteriorating and we need to move quickly to protect our share," Casey said.

He said Hawaii had been relying on an expected increase in Japanese travelers, beyond the estimated 2 million who came to Hawaii last year, to make up for a stagnant mainland market. JAL and ANA's plans will help, but more is needed, he said.

While 2 million Japanese visitors, a record last year, may not seem bad, tourist industry executives said the industry plans for and needs increases.

"If the total visitor count is flat, it would have some effect on us," said Ray Kitsu, director of Asian sales at Sheraton Hotels in Hawaii.

"A flat year for us is negative. Companies need to grow. Costs keep rising. We have a number of business partners. Certainly their targets are higher each year," Kitsu said.

As for JAL and ANA's Japan-Hawaii plans, marketing executives say that can only help.

"Any time the airlines are using their resources and finances to promote a destination, that's positive," said Kitsu.

Casey said any time an airline increases service it puts money into promoting the destination and that boosts the overall marketing effort.

Mutsuo Egashira, ANA's director of administration for North America, said he expects the airline's business out of Nagoya to be strong.

"We are expecting to carry many Japanese to Hawaii," despite direct competition on the route from JAL and Northwest Airlines, he said. Current flights by those carriers are packed, he said.

ANA ran three Nagoya-Honolulu flights a week from 1991 until early 1993 but dropped out because of competition.