Terrie's Take 592 -- Budget Airlines Change Things, e-biz news from Japan

Sun Nov 28 10:38:24 JST 2010

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
(http://www.terrie.com)

General Edition Sunday, November 28, 2010, Issue No. 592

+++ INDEX

- What's New
- Short Takes
- News
- Candidate Roundup/Vacancies
- Upcoming Events
- Corrections/Feedback
- News Credits

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+++ WHAT'S NEW

The announcement two weeks ago that the Narita
International Airport Corporation will reduce their
landing charges is certainly a sign of the times. The NIAC
(used to be called the NAA) is going to drop fees at least
temporarily from JPY310,000 per aircraft to just JPY50,000
-- a whopping reduction of 86% and enough to push
decision makers of a certain type of carrier to decide Narita
over Haneda.

Which type of carrier? Well, probably the only type that
will see substantial growth out of Japan in the future --
budget carriers. The impact of the JAL bankruptcy,
the recent Open Skies agreement with the USA, and also
Haneda airport's opening of its fourth runway in October,
have all had a dramatic effect on how air travel is run in
Japan. The authorities are now, belatedly perhaps, realizing
that they have to get competitive, or they will get left
behind by Incheon (S. Korea), Singapore, and Shanghai as
air hubs in Asia.

Last month, the NIAC announced that it will construct a new
terminal for low-cost carriers in an effort to attract the
budget airlines to use Narita over Haneda. In line with its
construction plans, Narita will also increase
landing/take-off slots by 10% (to 330,000) in FY2011, and
up to 30% more by FY2014. Of course, that will only occur
if they can attract the air traffic volumes, and therefore
Narita's efforts can't go unaided by the government's
continuing push for tourists. As a comparison, Haneda
currently offers about 60,000 landing/take-off slots annually.

There is nothing like competition to cause old
organizations to change, and it's good to see this
happening at Narita. They are certainly going to have some
catching up to do, as budget air travel seems to be the
wave of the future, and Haneda and other airports in Japan
are already attracting some high volume players.

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[...Article continues]

First of the budget airlines to use Haneda will be
AirAsia X from Malaysia. The airline will launch a route
from Haneda to Kuala Lumpur in early December, and reckons
that its flights are already 90% full for December, and
over 80% for January. AirAsia X is going to start with 3
flights a week and expects this to increase to daily
flights. Already the company has applied for a second route
between Osaka and KL.

JTB knows a good thing when it sees it, and is marketing
low-cost package tours with AirAsia X. You'll be able to
go for two-nights, four-days, including accommodation, for
just JPY30,000. These prices are about 40% lower than other
travel agencies are offering using aircraft out of Narita.
OK, yes, the flights will leave Haneda at 11:45pm and get
you into KL at some ungodly hour in the morning, but at
JPY30,000, these are going to be snapped up. Budget travel
agency HIS would have to be concerned about this tie-up
and also the fact that JTB is now going after the low-cost
traveler who was once HIS' domain.

Another budget airline, which is only just being
established and doesn't yet have a name, is a joint venture
between ANA and First Eastern Investment Group announced
back in September. This airline will start operations in
the second half of FY2011, meaning this time next year,
from its Osaka hub. It will compete for low-cost
passenger traffic both within Japan and also between China
and Japan and Korea and Japan. On the international side of
things, this j/v doesn't come a minute too soon as ANA
experienced a 7% decrease in passenger volumes in November
(compared to last year).

Another concern for existing players in the air travel
industry is that likely change of destination for Japan's
holiday makers. Whereas JetStar and Australia were offering
some of the best access to warm climates and great holiday
destinations, AirAsia X and some other budget operators
still in the pipeline are going to be diverting Japanese
out-bound traffic to new locations. Actually, we see Hawaii
suffering from the incursions of Asian budget airline operators
as well. These more traditional locations are going to
have to work on their marketing to keep their numbers up.

So the advent of budget airlines being able to operate into
Japan should bring some interesting changes in inbound
tourism. Until now the Japanese government seems fixated
with China, but with the availability of great deals like
AirAsia X's, this means that tourist traffic from other
countries is likely to soar as well. This can only mean
greater demand for budget accommodation, and those hotel and
hostel management companies who've been hurting since the
exodus of western foreigners, and who are not on the Chinese
tour agencies' approved lists, will see some welcome respite.

It will be interesting to see also, to see if the surge in
travelers pushes up the price of real estate for ski
resorts, hot spring areas, and downtown Tokyo
apartments, whether the interest of Chinese buyers
in the last couple of years, is just a blip in the big
scheme of things.

...The information janitors/

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+++ NEWS

- Tokyo-to to buy private forests around Tamagawa
- 4-month waiting list for Gopan breadmakers
- Hotels enjoying more business
- TPP talks prompts farm reform panel
- Timber prices expected to rise

-> Tokyo-to to buy private forests around Tamagawa

The Yomiuri Daily gaily called a news item about Tokyo
government planning to buy private forests in the water
catchment area for the Tamagawa river as "Keeping Tokyo
water tasty", but we'd characterize it as "keeping Tokyo
forests out of control of foreign interests". (Besides, do
you really want your water to be "tasty"?!) The government
is apparently planning to buy 10,000 hectares of forest in
Okutamamachi and Koshu/Tabayamamura/Kosugemura in
Yamanashi-ken. ***Ed: Where they will get the money from is
not revealed at this stage -- will Ishihara start up
another bank, called Patriots Bank, maybe?** (Source: TT
commentary from yomiuri.co.jp, Nov 23, 2010)

http://www.yomiuri.co.jp/dy/national/T101122004351.htm

-> 4-month waiting list for Gopan breadmakers

Sanyo Electric is on a huge roll (pun intended) with its rice-based
bread-maker unit, called Gopan. We wanted to buy one of
these for Christmas, but Sanyo says that it has been
overwhelmed with orders for the machine. They apparently
expected sales of around 58,000 units over the next four
months, but have received sales orders for the entire
production run in just the first month. ***Ed: This is such
a cool device.**

http://e.nikkei.com/e/fr/tnks/Nni20101125D25SS776.htm

-> Hotels enjoying more business

A recent nikkei survey indicates that tourism and business
travel is up and hotels are enjoying much better occupancy
rates than they have over the last year. According to the
nikkei, the average occupancy rate for mainstream hotels in
Tokyo rose 2.4% to 85.1% in October. Although the Senkaku
Islands dispute has dented Chinese tourist traffic by about
30% (down), apparently the slack is being covered by
tourists from Russia and elsewhere. Particularly notable
was a 670% jump in Russian tourists at the Royal Park
Shiodome, in response to marketing in that country. ***Ed:
Yappari, marketing works, even in a recession.** (Source:
TT commentary from nikkei.com, Nov 27, 2010)

http://e.nikkei.com/e/ac/tnks/Nni20101126D26JFA08.htm

-> TPP talks prompts farm reform panel

It looks like the Kan government is quite serious about
going ahead with the US-backed TPP (Trans-Pacific
Partnership) and Free Trade Agreement (FTA) talks. It has
said that it wants to accelerate discussions with Australia,
for a bilateral agreement. This means the farming lobby
has to sacrifice its protectionist ways, and the government
is going to set up a panel under direct control of the PM's
office, to find ways to "improve the productivity and
competitiveness" in agriculture, forestry and fisheries.
***Ed: This is all good stuff. Once the farmers are
placated and taken out as a hurdle, Japan's trade
opportunities will open up dramatically.** (Source: TT
commentary from japantimes.co.jp, Nov 27, 2010)

http://search.japantimes.co.jp/cgi-bin/nb20101127a4.html

-> Timber prices expected to rise

Research company Japan Lumber Reports reckons that low
inventories in Japan, coupled with competition from buyers
in China and India, is set to cause price increases for
hardwood logs shipped out of Indonesia. In Sarawak, log
prices gained US$6-8 over a month ago, a 5% increase, thus
potentially setting the scene for much bigger increases
once the rainy season starts and timber exports are
suspended for a while. ***Ed: Actually, Japan's housing
industry is still in trouble and housing starts in
September were just under 72,000 units, the 3rd lowest
number since records were started. The demand for condos
has doubled since last year, but timber-framed homes are
just 13% up on the same period.** (Source: TT commentary
from ihb.de, Nov 27, 2010)

http://www.ihb.de/wood/news/logs_softwood_plywood_24881.html

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.

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-----------------------------------------------------------

***------------------------****-------------------------***

+++ UPCOMING EVENTS/ANNOUNCEMENTS

** Surprisingly, no events or announcements this week...

***------------------------****-------------------------***

+++ CORRECTIONS/FEEDBACK

In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to editors at terrie.com.

*** No comments or feedback this week.

***********************************************************
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+++ ABOUT US

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Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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