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Difficult days

Geoff Tudor looks at how the Japanese aviation market is faring ten months on from the country’s devastating March earthquake and tsunami.

With Japan no longer grabbing the global headlines, it is perhaps easy to forget that it is just ten months since the country suffered one of the deadliest earthquakes and tsunamis in its history.

The March earthquake, which triggered the tsunami, left 21,000 people dead or missing and triggered a nuclear crisis.

The losses occurred across 18 prefectures and destroyed or damaged more than 125,000 buildings.

Few countries in the world could have coped with such devastation so well or with such calm dignity as Japan, which in a typical Japanese way, has set about repairing the damage with the minimum of fuss.

As a result, ten months after the Great East Japan Earthquake, accompanying tsunami and nuclear power plant failure, drastically reduced inbound travel demand is the major remaining impact for the air transport industry.

The threefold disaster's damage to aviation infrastructure was surprisingly light – with the exception of Sendai Airport, which bore the full force of the tsunami.

Surface transport systems such as Japan's fabled high-speed rail systems and motor expressways were far more badly hit. Thanks to the efforts of the domestic air transport industry, communications between the stricken north-east and the areas of Japan not affected by the quake were maintained, supporting the flow of relief goods, support personnel and regular travellers.

But Japan's reputation as a safe tourist destination received a devastating blow when the destruction wrought by Mother Nature was compounded by the tsunami-caused meltdown at the Fukushima Number One nuclear power plant.

Fear of leaking radiation created a state of confusion, in some cases panic. At Tokyo Narita, Chinese travellers, many without reservations or tickets, sought and fought to leave Japan.

A dearth of crucial, reliable information and a plague of rumours dealt harsh blows. In the remaining 20 days of March following the disaster, the number of inbound visitors to Japan dropped by 73% to just 137,000 as airlines cancelled flights or re-routed services away from a feared-to-be-toxic Narita.

"In the blink of an eye the disaster destroyed the intangible value Japan has built up over many years," All Nippon Airways CEO, Shunichi Ito, lamented in early May.

The negative impact on demand, particularly on inbound travel, was sudden and severe.

The lack of serious damage to passenger facilities at Tokyo's airports was largely due to the fact that the epicentre of the quake lay 400 kilometres northeast of Tokyo, some 30 kilometres off the Tohoku region's Sanriku coast, a famously picturesque spot.

The Tohoku (north-east) region where the quake and tsunami did their worst includes 11 airports. Seven were unscathed although three inland airports suffered moderate damage causing their temporary closure.

By far the worst hit was Sendai Airport, built on the Pacific coast and in the path of the tsunami. Sendai, population one million, is a key city in the northeast, about 300 kilometres from Tokyo.

Altogether nine carriers fly to Sendai and domestic traffic accounts for 91% of all passengers there. The major domestic airline operating there is ANA, with about 60% of the seats. Other domestic carriers include Air Do, Ibex, Japan Airlines (JAL) and JAL Express. International airlines serving Sendai included Air China, Continental, EVA and Korean carrier, Asiana.

By a stroke of luck there were no passenger aircraft at the Sendai Airport's six boarding bridges when the tsunami swept in, marooning some 1,300 people in the terminal. All, including  around 600 airport workers and airline staff, retreated safely to the second storey.

Japan Self Defense Forces personnel started clear-up operations, enabling helicopter rescue operations to begin on March 15.

They were later supported by US Navy, Army and Marine personnel plus a US Air Force unit specialising in building and restoring runways.

By March 17, the runway was partially cleared for rescue flights and on March 21, the 3,000 metre runway was completely cleared, permitting C-17 heavy lift airplanes to fly in more bulldozers and other equipment for rubble clearing plus relief supplies for distribution to evacuation centres.

Sendai re-opened for daytime commercial flights on April 13, when JAL and ANA resumed limited services from Itami (Osaka) and Tokyo's Haneda airport.

On July 25, domestic services were fully restored together with international flights to Guam and Incheon.

Apart from the drama at Sendai, the other airports in Tohoku rallied to the relief efforts, as Japan's Ministry of Land, Infrastructure and Transport approved 24-hour operations at Hanamaki-Iwate, Fukushima and Yamagata airports.

In most cases, they operated normal flight schedules. JAL and ANA operated extra sections to bring in relief goods and personnel. They provided vital transport links to the northeast in the absence of Tohoku Shinkansen high-speed railway, which was out of action until the end of April.

Impact on air travel demand

From airline reports, it now appears that domestic passenger levels are almost back to normal – and, in a few cases, are showing improvement on a year-on-year basis after a post-quake slump.

A major factor in the domestic leisure travel slump was Jishuku, which translates as 'self restraint'. It's considered bad form to be seen enjoying oneself when others are suffering. A great many Japanese, as a gesture of sympathy and solidarity with disaster victims, gave up recreational travel for a spell, with a negative impact on domestic carriers. This tendency gradually eased.

At the end of March, Japan Airlines reported a 28% decline in domestic passengers.

All Nippon Airways suffered a domestic demand decline in the three-month period due to weak consumer confidence following the earthquake. However, both business and leisure passenger numbers began to recover after bottoming out in April 2011, with the level of demand in June 2011 almost returning to that of the previous year.

ANA's latest figures for the month of September show that it carried 3.39  million domestic passengers during the month – just 3.6% down on the same month a year ago.

In marked contrast, Skymark Airlines – the most successful of the 'new' domestic carriers – appears to have been largely unaffected by the disaster. Indeed, it announced a 52.6% rise in passenger numbers in July and launched a new service between the southern islands of Okinawa and Miyakojima on September 15.

And Kitakyushu-based StarFlyer, which has registered an upturn in passengers since June, felt confident enough about the state of the market in early November to hint that it is finalising plans for an initial public offering on the Tokyo Stock Exchange in late December.

International outbound

International travel by the Japanese was going up before the quake, with February showing a 7.9% increase on the same month last year to 1.39 million, according to the Japan National Tourist Organization (JNTO).

There was a 9.1% dip year-on-year in March, due to the quake's influence, but by June the drop was just -2.9% and the volume of Japanese outbound passengers has, in fact, exceeded year-on-year levels since July, the latest figures for September showing a 6.7% rise to 1.64 million.

The Japan Tourism Marketing Co (JTM), which provides analysis of JNTO's figures, described the 6.7% upturn as "remarkable", as it represented the biggest increase in September traffic since 2000.

Helping the outbound growth was the strong yen, which ironically adds to the barriers for encouraging inbound travel.

International inbound

It is this section of the market that is causing the greatest angst. In the first 10 days of March, inbound travel trends indicated growth year on year of 4%. After the triple hit of the quake, tsunami and nuclear disaster, passengers cancelled in droves, driving a drop for the March 11-31 period of a shocking 73% year-on-year, averaging out as 50.3% for the month as a whole.

Japan Airlines at the end of March reported a 25% slump in international passengers and warned that a tough time lay ahead, the immediate concern being falling tourist arrivals.

In April, Japan's inbound visitor total dropped by a record 62.5% on the same month in 2010 and a hefty 50.4% decline in May followed. Although numbers have been down ever since, there are signs that the rate of decline has bottomed out, with September's 24.9% dip in traffic being the smallest monthly decrease to date.

The JTM report states: "While the international visitor figure for 2011 is gradually catching up with that in 2010, the radiation issue remains a big challenge for full recovery. Additionally, continuous high exchange rate of yen against major international currencies is another hampering factor against tourist traffic flow to Japan.

"Among the major source markets Thailand, with added airline seat capacity, is the only country whose tourist arrivals to Japan in September exceeded that in the same month of the previous year. Visitors from China, Hong Kong and France showed a remarkable recovery in September, while Taiwan, Singapore and the US saw a slowdown in the pace of recovery."

The new government needs to think about steps to take to rebuild inbound travel, says Kazuo Kino, a principal analyst at industry think-tank Japan Aviation Management Research.

The Japan Travel Agency, the tourism arm of the transport ministry (full name, the Ministry of Land, Infrastructure, Transport and Tourism or MILT) is taking various initiatives, supported by the Japan National Tourist Organisation.

About 1,000 media and travel industry professionals have been invited to Japan to see conditions for themselves and verify such items as food safety.

Regional cities and districts have been sending delegations to international tourism and travel conferences and to foreign airlines to persuade them to resume services where they have been reduced or to start anew.

Recently Japan has been making more and more 'Open Skies' deals with other countries to encourage traffic flow. Other Open Skies agreements, which include the eventual access to metropolitan airports, have been concluded with the USA, Korea, Singapore, Malaysia, Hong Kong, Vietnam and Macau.

Issuance of Japanese visas, often a sore point with Asian visitors, is being eased, notably for Chinese visitors. But some observers say that Japan needs to spend more money on inbound tourism promotion.

Kino points out that Japan's expenditures on promoting itself falls well below those of other countries.

"The JNTO budget in 2008 was $44 million," he says. "By comparison, Switzerland spent about $90 million on promoting international tourism. Singapore spends about $156 million a year. Japan must compete more – and now is the time to start." 


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