Light demand delays Japan Airlines' recovery on international routes
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Bloomberg News Service
TOKYO — Japan Airlines Co., Asia's largest airline, said demand on international routes will take longer than expected to return to pre-Sept. 11 levels as vacation travelers steer clear of U.S. cities.
"Reservations for August haven't been so good," said company President Isao Kaneko. "We expect a gradual recovery and we can see a 100 percent recovery in October or some time like that," Kaneko said. Japan Airlines said in May it expected passenger numbers to rebound fully by this month.
The delayed recovery on U.S. routes contributed to a 10 percent fall in Japan Airlines' total passenger numbers in June to 1.02 million, Kaneko said. The number of people traveling on trans-Pacific routes fell 21 percent to 295,600 in the same period, company officials said.
Japan Airlines was also hoping that Hawai'i would reach 100 percent of year-ago levels by August, but that hasn't been the case.
Arrivals of Japanese tourists, which had come back to 90 percent of the year-ago level in May, fell back to 80 percent to 85 percent of that level in July and early August, according to state statistics.
Amid a continued slowdown in Japan's economy, Japanese tourists have been increasingly choosing closer and less expensive Asian destinations, including Korea, China and Vietnam, for their vacations.
"The economy is having a bad impact on travel demand," said Futoshi Usui, an analyst at Nikko Asset Management Co.
Japan Airlines now flies 11 jumbo jets daily between Japan and Hawai'i, equal to the number it had before Sept. 11. But the airline is evaluating its plans for the fall schedule, which could include a change in the number of flights coming to Hawai'i.
Still the airline is hopeful that growth in its cargo business will help make up for shortfalls in passenger revenue, Kaneko said.
The airline carried 61,989 tons of cargo in June, one-fifth more than a year ago, helped by increased shipments of information technology equipment from Asia to the United States and from Japan to other Asian countries.
"The surplus from cargo will almost completely offset the decrease in the passenger numbers," Kaneko said.
A slowing U.S. economy, however, may make it tough for Japan Airlines to count on growth in its cargo business later in the year, Usui said.
"Overall demand for cargo shipments hit a peak in the first quarter" ended June 30, Usui said. "That cargo growth probably isn't sustainable because the U.S. is probably on the verge of recession."
Advertiser staff contributed to this report.
