Japan outlook mixed
Hawaii faces flight cuts and soft
arrivals, but is gaining market
share among Japanese travelers
Pending flight cancellations between several Japanese regions and Honolulu later this year reflect trouble in the market and are bad news for some local tourism businesses.
"We need more airlift -- seats -- to increase the number of visitors here," said Ryokichi Tamaki, vice president of marketing for travel wholesaler Jalpak, a travel affiliate of Japan Airlines.
Still, "if the money's not there, we're not flying," he said.
Japan Airlines plans to suspend unprofitable flights between Honolulu and Sapporo, Sendai, Niigata and Hiroshima starting in October and November. JAL officials have said they would restore the routes when business picks up. Japan Airlines reported a group net loss of $642 million in the three months that ended June 30.
On Monday, Northwest Airlines Corp. said it would suspend flights in October between Kansai airport and Honolulu.
Foreign travel by the Japanese has taken a big hit this year because of SARS, as well as terrorism fears and economic woes. Following the war with Iraq, Hawaii visitor arrivals from Japan dropped 40 percent in May, while overall Japanese outbound travel dropped by 55 percent. Hawaii's arrivals from Japan have since improved, and were down 16 percent last month from the same month last year, according to preliminary state data.
The impact of canceled flights later this year will hurt, Tamaki said. Wintertime is the high season for selling Hawaii to Sapporo, which is on the northern Japanese island of Hokkaido.
While Hawaii has lost Japanese visitors to the SARS scare and other woes, other destinations have fared worse, and the state has gained market share this year, reversing Hawaii's long-term decline.
Hawaii was visited by 9.8 percent of Japan's outbound travelers in the first half of this year, an improvement from 9 percent in the same period last year, according to the state Department of Business, Economic Development and Tourism and the Pacific Asia Travel Association.
"We should be the envy of every other destination in terms of our position," said Sharon Weiner, group vice president of Japanese retailer DFS Hawaii and board member of the state Hawaii Tourism Authority.
Hawaii had been losing market share since 1992, when it secured 14.5 percent of Japanese outbound travelers.
Whether the state will continue to recover market share remains to be seen.
The state forecasts that Hawaii's Japanese arrivals will decrease 7.6 percent in the second half of 2003, to 746,670 visitors from 808,270, because of lingering weakness in the economy as well as the impact of world events. The yen has remained stable in the past year.
On the other hand, a recent forecast by the Pacific Asia Travel Association says Japanese outbound travel should increase slightly in the second half of 2003, by 0.8 percent, from 2002.
The state expects Hawaii will end the year with 1.32 million Japanese visits, down 10.7 percent from 1.48 million in 2002, and down 38.6 percent from 1997's record 2.15 million Japanese arrivals.
So far, concession sales at DFS Hawaii are down 4 percent this year from last year, and down 34 percent from pre-September 2001 levels, Weiner said.
Japanese tour operators say recent improvement in bookings are a sign that things may turn around in September, following the Obon season.
NTA Hawaii's August bookings are down only 10 percent from last year, an improvement from a 30 percent drop in June, said Hideaki Kembishi, president and chief executive.
Kembishi expects continued improvement in September in beyond. Big groups that canceled trips in the first half of the year started rebooking in July for October and November.
For Jalpak, bookings for September are 10 percent below last year. "It's pretty good actually. I didn't realize that," Tamaki said. He noted that this year's September booking pace is more than 30 percent below where it was in 2000.
Japan's economy is flat, with positive signs for the future, a Bank of Japan official recently told reporters.
