Japan Earthquake & Tsunami: The Impact on the Tourism Economy – Part II
by Gary Bowerman
“The devastating disaster has had an enormous impact on Japan’s inbound tourism. While many areas in Japan remained unaffected by the disaster, they are also suffering from the sudden decrease in international visitors,” writes Tadatoshi Mamiya, President of the Japan National Tourism Organization on its official website.
“We are deeply concerned that this will not only affect Japan’s tourism industry directly, but also will have a very negative impact on our industry partners around the world,” the JNTO President adds. “Once the situation in Japan stabilizes, we will strive to resume all promotional activities as soon as possible.”
The ramifications for the travel industry of the Japanese earthquake, tsunami and nuclear radiation leaks at Fukushima could not be more clearly stated. Demand-based airline service postponements and re-routings are not just affecting inbound travel to Japan, but also outbound travel across Asia and worldwide.
Events in Japan have had a “major impact on regional travel and tourism flows”, said Andrew Herdman, Director General of the Association of Asia Pacific Airlines. Demand is expected to be “significantly lower” than normal both to/from Japan in the next couple of months before consumer confidence is restored. Travel patterns are expected to return to normal “hopefully by the second half of the year,” Herdman says.
The Centre for Asia Pacific Aviation (CAPA) reports that the number of foreigners arriving at Tokyo Narita between March 11, the day the earthquake and tsunami struck, and March 22 “declined by around 60 percent year-on-year to around 67,000 arrivals.” Departures and arrivals by Japanese nationals during the same period “declined by around 100,000 to around 200,000 in each direction.”
CAPA adds that a total of 71 airlines serve Japan and “many have made schedule changes – including cancellations and re-routings – in response to the situation in Japan.” The “most heavily exposed” at Tokyo Narita, where more than 90 percent of traffic is international, are “JAL and ANA, followed by Delta, United, Korean Air, Cathay Pacific, Continental Airlines, Air China and China Airlines”.
Qantas has admitted that the Japan earthquake and tsunami have impacted its revenues by AUD45 million. In late March, the Australian carrier announced the suspension of up to four return weekly Jetstar services from Australia to Japan (from April 1 to end of August); plus Qantas services between Perth and Narita (from May 8); and the downsizing of Qantas aircraft between Sydney and Narita from a Boeing 747 to an Airbus 330.
Hong Kong-based Cathay Pacific is suspending five daily services between Hong Kong and Narita from April 1-15, plus some services to/from Osaka and Nagoya. “It is too early to say however how long this situation will last and how quickly business will return to normal,” said Tom Owen, Cathay Pacific’s General Manager of Revenue Management. “At the moment we expect several months of weakness with a recovery towards the summer but there are still a lot of variables out there that might alter this view going forward.”
Meanwhile, American Airlines is temporarily suspending services from New York to Tokyo's Haneda Airport and from Dallas to Tokyo's Narita Airport, while Delta announced a 20% reduction in capacity on routes to Japan through May, and the postponement until July of a new route between Narita and Guangzhou, in southern China.
The knock-on effects for global travel markets are clear. Japan represents 6.5% of worldwide scheduled air traffic and accounts for one-fifth of traffic within the Asia Pacific region, according to CAPA. It says the top international travel markets connected to Japan are the United States (which received 4.33 million Japanese arrivals in 2010, including 1.2 million to Hawaii), China (3.73 million), South Korea (3.02 million), France (2.48 million) and Hong Kong (1.31 million).
Financially, the “most exposed market is China, where Japan accounts for 23 percent of its international revenues,” says CAPA. Taiwan and South Korea collect 20 percent of tourism revenues from Japanese operations, followed by Thailand (15%), the US (12%), Hong Kong (11%) and Singapore (9%). France is the most exposed European market at seven percent, followed by Germany (6%) and the UK (3%).
“Japan is an important link in global air transport. A major slowdown in Japan is expected in the short-term,” said Giovanni Bisignani, outgoing Director General and CEO of IATA. “The fortunes of the industry will likely not improve until the effect of a reconstruction rebound is felt in the second half of the year.”
Looking for the positive side, international flights using Tokyo Narita Airport operated by Air Canada, Lufthansa, Alitalia, Finnair Turkish Airlines, Virgin Atlantic and Etihad – for which destinations or routes were temporarily diverted due to operational reasons – resumed regular operations between 23 and 27 March, according to the Japan Ministry of Land, Infrastructure, Transport and Tourism.
Meanwhile, Japan Airlines – which announced a total passenger drop of 25 percent on its international routes since 11 March – has raised USD3 billion in funding to emerge from bankruptcy protection. It has shed one-third of its staff, grounded over 100 aircraft and closed 49 loss-making routes but is reportedly planning to establish a domestic low-cost carrier by teaming up with Qantas’ Jetstar subsidiary. The new airline will aim to challenge All Nippon Airways’ slated launch of a Kansai-based budget airline in the second half of 2011.
From the depths of despair, Japan’s travel and tourism is preparing for a better future.
Japan Travel Updates
www.jnto.go.jp/eng/ - comprehensive information about the effects on tourism of the earthquake, tsunami and radiation leak provided by the Japanese Tourism Board.
www.mlit.go.jp/koku/flyjapan_en/ - regular updates on post-tsunami/nuclear radiation leak air and transport services provided by the Ministry of Land, Infrastructure, Transport and Tourism.
www.narita-airport.jp/en/ - regular updates on services and radiation readings at Narita airport.
- Currently, all airports in Japan are open and in operation, except Sendai Airport.
- No road traffic restrictions are in place, except on part of the Joban Expressway.
- All Shinkansen high-speed rail lines are in operation, except the Tohoku Shinkansen (between Nasushiobara and Morioka), and the Yamagata Shinkansen (between Fukushima and Yonezawa)
(Source: Japanese Ministry of Land, Infrastructure, Transport and Tourism. Information correct as on 30 March 2011)
This blog was commissioned by AmEx.
About Gary Bowerman:
Oxford-born Gary Bowerman has travelled the world in search of a good story. After cutting his teeth in legal and tax publishing in London, Gary moved on to edit international business and travel titles before relocating to China in 2004. Resident in Shanghai, he has recently been a contributor to CNN Traveller, Business Traveler,CNBC Europe Business, New York Times, Travel & Leisure and South China Morning Post. Editor of the Singapore Highlights and Beijing Highlights guides, Gary is also one of the founders of Hong Kong and Shanghai-based media and marketing communications agency Scribes of the Orient.
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