Posted on: Sunday, August 10, 2003

Hopes dashed by new flight cuts

By Kelly Yamanouchi
Advertiser Staff Writer

Recent announcements of flight cuts by Japan Airlines and Northwest Airlines have dashed the slim hopes of those in the tourism industry that a recovery in the Japanese market might emerge later this year.

Coming on top of the lingering effects of the Iraqi war and SARS, the airlines' decision to suspend routes beginning this fall citing a lack of demand was not just another blow to the international sector of Hawai'i's $10 billion tourism industry. It may well be the nail in the coffin for many businesses that rely on Japanese tourists, who make up nearly 20 percent of all visitors to the state.

Following the announced flight cuts, the forecast for airline seats into Hawai'i from Japan calls for a decrease of 8.6 percent this year compared with last year, according to an analysis of OAG airline schedules by the Hawai'i Visitors & Convention Bureau.

"It's not good news. It's a major decrease," said Chris Kam, director of market trends for the visitors bureau.

The decline means 1.79 million airline seats are expected on Japan flights into Hawai'i by year's end, compared with 1.96 million last year. This year's projection is a far cry from the 2.99 million airline seats recorded in 1997, the peak year of Japan-to-Hawai'i traffic.

The 8.6 percent decline is significantly larger than the 4.8 percent decrease expected before the Northwest and Japan Airlines announcements.

The good news is the total number of airline seats, including Mainland and international flights, is increasing to 8.56 million this year from 8.25 million last year, led by a rise in seats from the Mainland.

But Hawai'i has yet to fully recover from the industry-wide slump triggered by the Sept. 11 terrorist attacks: The total number of seats flying into the Islands this year will be lower than the 9.35 million in 1997.

The airlines have said they are willing to restore flights if more people are willing to fly, so the situation could change, Kam said.

Meanwhile, the combination of war, SARS and flight cuts is being felt across the state, but particularly in Waikiki, which depends more heavily on visitors from Japan than any other resort destination in the state.

At the Halekulani hotel, general manager Fred Honda said occupancy this month is expected to reach a three-year record of 85 percent.

But for fall bookings, "we're still trailing between 8 to 10 percent."

It may be too early to tell if that lag will hold through the end of the year; many travelers now wait until just weeks before their trip to make reservations.

Nonetheless, Honda noted the cancellation of flights from Japan argues against a definite recovery.

Honda hopes the hotel's recent ranking as the fourth best in the United States by Travel and Leisure magazine will bring in more business.

Any boost is sorely needed by those who depend on Japanese business.

International travel to the entire United States fell 12 percent in May, according to federal data released last week. Japan recorded the largest drop in arrivals with a 38 percent decline.

According to a survey conducted before the latest airline cuts by the Japan Association of Travel Agents, a group representing Japanese travel agencies, Japanese reservations for Hawai'i are down through September.

But the pain may be easing somewhat. In April, bookings were down 33.3 percent from the year before. They declined further to about 43 percent for May and June.

Reservations then showed an improvement in July, dropping just 29.3 percent, before declining to 35.5 percent for August and 34.9 percent for September.

ANA Hallo Tours is receiving some Japanese group bookings for the fall that were canceled earlier in the year. Yet "compared to the past year, it's not fully recovered yet," said general manager Eiji Miyamoto.

"Things are getting better," he said, "but it's still slow."

Reach Kelly Yamanouchi at kyamanouchi@honoluluadvertiser.com or 535-2470.