Budget airlines promise scant help for local economies
What will 23,980 yen buy you? That’s what a round-trip flight between Shanghai and Ibaraki costs aboard the China-based LCC (low cost carrier) Spring Airlines, including the fuel surcharge. On the same day, travelers could obtain tickets for a China Eastern Airlines (Dongfang) flight between Shanghai and Narita for 39,400 yen. That price reflects a 40% reduction by making the purchase online.
Shukan Diamond (July 7) reports that Spring Airlines has achieved an average passenger load factor of 95%. Between 70 to 80% of the passengers are Chinese.
The economic boost from visitors aboard such flights, however, is open to question. Baggage allowance is only free up to the first 15 kilograms, and every kilogram beyond 15 results in an additional charge of 1,500 yen. As opposed to flights to Shanghai aboard ordinary carriers departing from Narita—where it is not uncommon to see departing Chinese travelers checking in two or three rice cookers and other bulky souvenirs—it is rare, the magazine reports, to see passengers at Ibaraki checking in so much baggage.
This also calls to question whether the inbound passengers who travel here aboard LCCs can be expected to make much of an impact on Japan’s economy.
“Actually, a lot of Spring Airlines’ passengers are Chinese who reside in Japan or those using it for business trips,” a source in the airline industry tells the magazine. One Chinese passenger mentioned he utilized the carrier to hold down travel costs, adding that driving to Ibaraki from his home in Yokohama costs about the same as Narita, and the airport parking charges at Ibaraki were negligible.
Another reason for skepticism that LCCs will impact positively on the economy is that many of their passengers are first-timers who will not contribute much to local economies. Most of the passengers disembarking at Ibaraki Airport were seen boarding chartered buses, which transported them to Tokyo at the cost of 500 yen per head.
Most of the gifts being carried back home, moreover, were souvenirs from Tokyo or national brand items such as Hello Kitty goods from Sanrio. Ibaraki souvenirs such as sembei (rice crackers) or soba (buckwheat noodles) enjoyed limited demand, but most traveler expenditures clearly went elsewhere.
“People back in China want things bearing images of Mt Fuji or items with the Tokyo logo, and Ibaraki doesn’t have much name recognition,” sighed an airport worker.
Japan’s major domestic travel agencies appear to show little enthusiasm for inbound visitors, who account for only about 1% of the 6 trillion yen in annual revenues from travel. “Even if foreign travelers increase, unless they help boost revenues, we’re not really interested in handling them,” was how a source at one agency put it.
Part of this unenthusiastic attitude toward budget visitors may lie in the entrenched view of “Yasukaro, warukaro” (low price means low quality). The visitors aboard LCCs, it is feared, may aggravate the already competitive situation.
Next year will mark the 10th anniversary since the cabinet under former Prime Minister Junichiro Koizumi announced an annual target of 10 million foreign visitors to Japan. The figure reached 8.6 million in 2010 before plummeting due to last year’s earthquake, tsunami and nuclear plant meltdown. While this year shows encouraging signs of recovery, visitors as of May were still lagging 7.3% behind 2010.
“LCCs are making it cheaper for domestic travelers to get to Sapporo and other regional destinations,” remarks Obirin University Prof Masaru Suzuki, an authority on tourism. “It also presents the industry with a chance to propose new types of travel, such as for foreigners to fly here aboard LCCs and then return home inexpensively aboard ferries, that permit them to carry back lots of purchases.”
The ultimate question is, can the industry generate these kinds of new ideas—to harness LCCs in ways that will stimulate growth in the travel business?